IMF, eurozone seek velvet divorce

Even though no officials have publicly said so, it is now certain that the International Monetary Fund will not participate in the Greek bailout program with funding.

IMF Managing Director Christine Lagarde meets German Chancellor Angela Merkel in Berlin on Monday but hardly anyone believes there will be a compromise on Greece’s debt that would allow the Washington-based Fund to stay on board.

Rather, discussions are already under way to secure the IMF a velvet divorce from the eurozone that will have the least repercussions for Greece.

The IMF now will maintain an advisory role in the post-bailout supervision of Greece.

Moreover, as part of its annual report, it will draft a debt sustainability analysis in which it is expected to articulate the view that the debt is not sustainable, but that it can become so under certain conditions.

That way, analysts say, it will safeguard its reputation and ensure the international markets won’t be closed to Greece.

It has also been revealed that the Fund had planned to issue an official announcement that it would not participate last Saturday when the Washington Group meeting on the Greek debt bore no fruit.

According to reports, European officials had asked the IMF not to make the statement as there was still some hope, albeit exceedingly slim, for an 11th hour deal.

Officials were concerned that if the IMF said it would not activate its program, it would make the vote in the German Bundestag for the final disbursement to Greece of bailout funds and debt relief measures more difficult.

Meanwhile, the Finance Ministry on Friday submitted to Parliament the omnibus bill with the prior actions required by Greece’s creditors to complete the final program review.

The government is scrambling to secure approval for the bill on June 14 in the hope that the next Eurogroup meeting on June 21 will reach a comprehensive agreement on the last review, post-bailout supervision and the country’s debt pile.

The bill will be fast-tracked through Parliament, starting from the parliamentary committees of finance, commerce, social affairs and public administration on Monday, before it goes up for debate in the main chamber on Wednesday.