“Aggressive Standoff with Germany” as IMF Calls for Debt Relief for Greece


The Washington DC-based International Monetary Fund is openly clashing with the official German position in the Greek debt negotiations and has threatened to withdraw support for Greece’s bailout that European leaders and Greek prime minister Alexis Tsipras spent seventeen hours negotiating over the weekend.

The IMF is demanding substantial debt relief for Greece.

The New York Times called it an “aggressive standoff with Germany.”

The report states:

Greece’s public debt has become highly unsustainable. This is due to the easing of policies during the last year, with the recent deterioration in the domestic macroeconomic and financial environment because of the closure of the banking system adding significantly to the adverse dynamics.

The financing need through end-2018 is now estimated at €85bn and debt is expected to peak at close to 200 percent of GDP in the next two years, provided that there is an early agreement on a program. Greece’s debt can now only be made sustainable through debt relief measures that go far beyond what Europe has been willing to consider so far.

The report vindicates the Greek position of ex-Finance Minister Yanis Varoufakis and Tsipras, who have been calling for debt relief as a way for Greece’s debt to reach a sustainable level.

Germany and other European officials have opposed any restructuring of Greece’s debt.

Speaking on the condition of anonymity because he was not authorized to speak publicly about the matter, a Treasury Department official told The Pappas Post that this has “President Obama’s signature all over it.”

The US government is the IMF’s main stakeholder. The Obama Administration— although taking a sideline role in the debt negotiations, has been extremely vocal about the need for debt relief and the need for Greece’s debt sustainability to be addressed, through its Treasury Secretary Jack Lew.

The conclusion of the IMF statement is clear- if Europe wants the third bailout to work, it must either grant Greece three decades grace before repaying its debts, or cut the face value of its borrowings, deeply.


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