IMF-Berlin deal still no closer

German Finance Minister Olaf Scholz has lowered expectations about the participation of the International Monetary Fund in the Greek program and the extent of Greece’s debt relief, while European Commission mission chief Declan Costello warned Athens against slowing down with reforms after the end of the program.

Against hopes cultivated for a deal at the meeting on the sidelines of the G7 meeting in Canada this weekend to see the IMF enter the program, Scholz told Reuters that Berlin’s decisions on the Greek debt will take time.

“We are revising our final estimates and will make our decisions at the end of June,” he stated, in contrast to the time frame the IMF has set for its decisions, in early June.

According to the Fund’s charter, a disbursement will have to come after a review, which is impossible if the agreement on the debt takes place at end-June. “There won’t be the necessary time for the IMF to activate its program,” a eurozone official told Kathimerini.

Scholz also lowered the bar for the debt relief expected, saying that the positive developments in the local economy have exceeded projections, which could be interpreted as a reduced need for the debt to be eased. The German attitude has long been particularly negative to debt relief, insisting on the smallest possible easing that would also be associated with specific terms and conditions.

Speaking at a conference organized by the Economic Chamber of Greece in Athens on Thursday, Costello said Greece cannot afford a reversal of reforms. “There should be no misreading of the growth momentum. It does not mean that the problems have been resolved,” he warned. Costello stressed the need for deep structural changes in the next five to 10 years without any relaxation in the process.

Likewise, Rolf Strauch, chief economist at the European Stability Mechanism, said that what will matter after the conclusion of the third bailout program “is that the full ownership of the program is maintained.”