Euro Zone Mulls IMF Involvement In Greece, Mission To Unblock New Loans Leftright 5/5 Leftright


(WN)Euro zone finance ministers will discuss on Monday what reforms Greece must make to release new loans from the bloc's governments and get the International Monetary Fund to join the bailout.

If the ministers reach an agreement, they will dispatch to Athens a mission of experts from the European Commission, the European Central Bank, the euro zone bailout fund ESM and the IMF to complete a review of the needed reforms.

"Today we will just discuss getting the mission of the institutions back to Athens and that requires agreement on substantial reforms and additional measures to be taken," the chairman of euro zone ministers Jeroen Dijsselbloem said.

The last such mission broke down in acrimony in December over differences as to what still needed to be done and how to ensure Greece meets agreed fiscal targets in the years to come.

Talks on how to proceed have been dragging on since then and now appear set to continue during election campaigns in the Netherlands and France, which euro zone officials have said may make a deal more difficult.

But Belgian Finance Minister Johan Van Overtveldt said on entering the meeting that a deal with Greece should not be rushed because of the European election calendar, especially as Greece did not face major financing needs until July, when it has to repay 7.2 billion euros in maturing debt.

"Of course elections may always pose a problem when trying to get good decisions but on the other end, we shouldn't take... half-baked solutions because elections are coming up," he said. Until July Greece has enough money to get by, ministers said, so there was no reason to talk about a new crisis.

A stalemate in reform talks between the lenders and Greece in 2015 led to a default on the IMF by Greece and the introduction of capital controls to prevent Greeks from taking their savings out of the country.

***Differences Remain***

But an agreement with Greece on what reforms still need to be completed is made more difficult by differences between the lenders themselves euro zone governments and the International Monetary Fund. The IMF says that with the reforms agreed now, Greece cannot reach and maintain a primary surplus of 3.5 percent of Gross Domestic Product from 2018 onwards as promised to the euro zone.

It insists therefore that either Athens undertakes further reforms, or the euro zone should agree to lower the primary surplus target to 1.5 percent of GDP and grant Greece debt relief to make it sustainable.

Unless the targets and reforms add up, the IMF says it cannot join the bailout despite insistence from Berlin that it should. At the same time, Germany says Greece does not need debt relief and will reach and maintain the agreed surplus targets. "The debt is not the defining problem at the moment, it is financed in the longer term," German Finance Minister Wolfgang Schaeuble said, adding: "The IMF will be a part of this (bailout)."

Schaeuble was backed by Slovakia, whose finance minister, Peter Kazimir said: "As for our friends from the IMF, we like them and it's good to have them on board, but I'm not willing to pay any price for their participation, green-lighting the IMF kind of debt relief–which Greece does not need."

Dijsselbloem said the issue of any further debt relief for Greece could only be discussed in 2018 when the bailout ends. "We will come back to that (debt relief) at the end of the program so at the moment we need to concentrate on these deep reforms that the IMF quite rightly asks of the Greek government," he said.

The IMF wants Greece to have more citizens pay income tax, arguing only half of the workforce was now contributing with the other half exempt. It also wants Athens to reform pensions, saying the system was now doubling up as an unemployment benefit system, because Greece did not have a separate unemployment welfare plan.

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