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IMF wants debt relief for Greece

greekbankGreece has conceded that the IMF will play a part in its new rescue deal.

Greek finance minister Euclid Tsakalotos said his government was now committed to keeping the IMF on board.

Earlier the country’s prime minister had seen fit to have a go at the fund for its “unconstructive” attitude during the previous tense negotiations. Last month PM Alexis Tsipras said the IMF should stay out of the new bail-out.

But the IMF appeared passive about providing more financial aid to Greece, insisting its support depended on the EU granting Greece substantial debt relief.

"In addition to a comprehensive policy package, Greece also requires debt relief from European partners," said IMF spokesman Gerry Rice on Thursday.

Reforms and debt relief were both "critical components" to secure IMF support, said Mr Rice. "The conclusion of discussions with us will depend on progress on both of these fronts," he said.

One point of contention between Athens and the IMF is pension reform. The IMF is demanding deep cuts to pensions in exchange for its involvement in the new rescue package.

Greek pension spending is around 10% of GDP which the IMF says is “unsustainable”. Creditors want that spending slashed by €1.8 billion a year, saying it can be achieved by increasing employer contributions rather than cutting pensions.

During the last five years of Greek bail-outs the IMF has been a “senior creditor”. As such, it has first call loan repayments ahead of the EU.

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-3 #2 dw 2016-01-16 10:47
Why is it assumed that a lender must always get their money back, no matter the dubious circumstances of the loan, the high risk involved and the compensating high interest rate received for many years? You could just as easily say the reckless lenders don´t deserve to have their money back.
-2 #1 Malcolm.H 2016-01-15 21:09
The problem for the EU and ECB is that Portugal is hanging on every word and wanting debt relief as well. Yet even the sketchiest analysis of the regulation of every aspect of the Portuguese economy and its banks shows it totally missed the required standard over the years.

The Regulators (don'tlaugh) intentionally allowing fraud and mismanagement through a lack of scrutiny.

Portugal does not therefore deserve debt relief - particularly as its public and private debt per head and per GDP is far higher than any other country in the EU. Half a trillion which Portugal would love to walk away from.

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