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IMF reportedly will contribute to Greek bailout


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IMF reportedly will contribute to Greek bailout

The International Monetary Fund is likely to contribute up to five billion euros to the third bailout package for Greece rather than the 16 billion the European Union is hoping for.

That is according to a report in German magazine Der Spiegel, which gave no source for the information.

The IMF’s involvement in the programme has been uncertain.

The Spiegel report said the IMF now shared the view of European lenders that Greece should post a primary budget surplus of 3.5 percent of gross domestic product in order to get fresh aid.

If so that would be a major change of position by the Fund which had previously said that was 3.5 percent figure was unattainable and Greece needed debt relief and precautionary fiscal measures to ensure that Athens can meet its fiscal targets before it will consider participating in the bailout.

The IMF declined to comment on the Der Spiegel report. “We will not comment on speculation. The Fund’s position is well known and hasn’t changed,” an IMF spokesman in Washington said.

The European Economic and Financial Affairs Commissioner Pierre Moscovici visited Athens this week and said there is progress between Greece and its lenders on concluding a bailout review but gave no hint that the differences with the IMF were close to being resolved.

Crude and misleading

The problem with IMF involvement is that it wants more austerity and Athens is adamantly opposed to that idea.

In a letter to the Financial Times on Friday Labour Minister Effie Achtsioglou wrote: “We cannot accept IMF insistence on further cuts in pensions.” She said Athens rejects “claims that the retirement age is too low and pensions too high”.

“As minister for pensions I must answer, hoping that IMF managing director Christine Lagarde will listen.”

In her letter, Achtsioglou said lenders’ statistics that put state contributions for pensions at 11 percent of GDP compared with a eurozone average of 2.25 percent were “crude” and “misleading”, pointing at a significant drop in economic output during the crisis and a jump in unemployment.

“Insisting on further pension cuts while Greek pensioners barely have enough to live on is definitely not the way to address public discontent,” she said.

That followed a statement from Greek government spokesman Dimitris Tzanakopoulos. On Thursday he said: “The government is negotiating with responsibility and resolve, for an agreement which will consolidate and stabilise the Greek economy and growth, and for a final exit from the crisis. All of that must however take place without any additional burden and without additional costs to Greek society. The goal therefore continues to be an agreement without a single euro more of austerity measures.”

Berlin meetings

On Friday, a German Finance Ministry spokeswoman said Berlin considered it essential that the IMF participate.

German Chancellor Angela Merkel will try to move things forward next Wednesday by holding separate meetings in Berlin with IMF head Christine Lagarde and European Commission President Jean-Claude Juncker.

Germany’s government, gearing up for what is forecast to be a close-run national election in September, opposes debt relief for Greece as demanded by the IMF. Still, Berlin says the current programme can only continue if the Fund joins in.

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