Merkel flags debt relief for Greece in bid for IMF participation

German Chancellor Angela Merkel voiced confidence that the International Monetary Fund will join the latest bailout for Greece, saying she’s ready to discuss debt relief to help the aid plan succeed.

In her first public comments since euro-area finance ministers backed the 86 billion-euro ($96 billion) package, Merkel praised Prime Minister Alexis Tsipras’s administration for changing tack after a “real confrontation” with Greece’s creditors. Greece must now keep up its “intensity of work” in the same direction, she said.

“We said in July that maybe — no, not maybe — there is still leeway on the extension of maturities, on interest rates,” Merkel said in an interview on Germany’s ZDF television. “One can do more in certain ways. But it’s also clear that within the euro zone there can be no haircut, no reduction in debt.”

IMF pressure for lowering Greece’s debt load and Merkel’s insistence that the fund provide part of the third bailout is placing the chancellor in a dilemma. German lawmakers, who will vote Wednesday on approving the aid package, have pressed for a clear commitment by the IMF.

IMF head Christine Lagarde has “made it very clear” that she will advocate “that the IMF joins the program in October,” if conditions including debt relief are met, Merkel said. “And I have no doubt that what Mrs. Lagarde said will then become reality.”

[Bloomberg]