IMF, eurozone still at odds over Greece’s debt servicing costs

Government MPs geared up on Wednesday for the parliamentary debate on the last batch of measures demanded by Greece’s lenders but there was no sign that the creditors had resolved their differences over how to deal with the country’s debt.

Finance Minister Euclid Tsakalotos, Alternate Finance Minister Giorgos Houliarakis and Economy Minister Giorgos Stathakis briefed SYRIZA MPs on Wednesday morning about the content of the multi-bill that was due to be submitted to the House by last night.

At the same time, though, the German government appeared unwilling to accept the International Monetary Fund’s reported proposals that interest on Greece’s debt should be capped at 1.5 percent and that its repayments should be scheduled for the period 2040 to 2080.

The German daily Suddeutsche Zeitung reported that German Finance Minister Wolfgang Schaeuble does not accept the idea of fixing Greece’s interest rates at 1.5 percent, while the MNI agency claimed that the IMF wants the debt issue to be addressed in its totality now, and not split into short- medium- and long-term, as the Eurogroup proposed earlier this month.

The German Finance Ministry insisted on Wednesday that the IMF’s demands do not mean that the basis for discussion at the May 24 Eurogroup will change. Spokesman Juerg Weissgerber said that the aim is to agree a “comprehensive, sustainable package in combination with the debt sustainability analysis that are currently being discussed.” He indicated that only short-term measures would be discussed now.

In Athens, the government ministers assured SYRIZA lawmakers that the vote on the multi-bill on Sunday would be the last time they have to cast ballots on fiscal measures for the foreseeable future. The draft legislation includes 1.8 billion euros in tax increases, mostly relating to indirect taxes.

The exact nature of the fiscal mechanism for introducing automatic cuts if Greece misses its primary surplus targets was not known on Wednesday as the relevant legislation is due to be submitted as an amendment before Sunday’s vote. However, the ministers assured MPs that it would not have to be activated.

They stressed that the completion of the review would have a positive economic impact and, along with an agreement on debt relief, would allow Greece to return to the international bond markets next year.