Monday, April 11, 2016

Greece And Creditors "Make Progress" In Review Talks

Via EUobserver:

Greece and its international lenders have made “progress” in talks on a review of Greek reforms needed to unlock new money, as talks continued on Monday (11 April). Representatives of the European Commission, the European Stability Mechanism (ESM, the eurozone's bailout fund), the International Monetary Fund (IMF), and the European Central Bank (ECB), had talks which lasted until deep in the night, and were due to be picked up again on Monday.

“Progress has been made over the weekend,” EU commission spokeswoman Mina Andreeva said Monday.

The same day, press agency Reuters reported a Greek government source as saying negotiators were “very close” to reaching a conclusion.

Greece and its lenders hoped to secure a deal before the IMF spring meeting later this week or before the next Eurogroup meeting on 22 April.

The talks concern a review of Greece's bailout reforms, and need to be concluded before up to €5 billion in aid can be unlocked. Athens needs the cash to pay bills and repay loans to the IMF and ECB.

A positive review of the reforms is also needed to convince the IMF to take part in the €85 billion bailout programme agreed last summer.

But to conclude the review, Greece on one side and the EU lenders and the IMF on the other side have to agree on budget targets and the scale of reforms.

While the IMF wants far-reaching reforms followed by some debt relief to make Greece's finances viable in the long term, Europeans are ready to agree on smaller reforms but are wary of debt relief.

According to Klaus Regling, managing director of the ESM, the IMF has to be on board.

Speaking to a group of journalists in Luxembourg last week, Regling noted that while the ESM is modelled after the IMF, the Washington-based fund is still needed for its expertise.

“We imported the recipes of the IMF into Europe,” he said about the ESM, which is an intergovernmental organisation established in 2012, as a permanent successor to a temporary bailout fund.

“That was good, because we didn't have to reinvent the wheel. We used basically the same instruments as the IMF uses.”

However, Regling said that his organisation, with a staff of 160, could not replace the IMF.

“The ESM has many advantages ... but we are still a young and small institution. … We have no intention of competing with the IMF or taking over the functions of the IMF. That is not possible and there is no intention of doing that. We want the IMF on board.”

Regling would not comment on the leaked transcript of IMF officials, which suggested the fund saw threatening Greece with a default as an option.

However, he did note that to have four different institutions involved “makes the process a bit more complicated” and is “not an easy set-up”.

“In all these teams there are excellent economists, and we know that excellent economists sometimes don't agree on everything. Often even if three economists sit in one room, they may have four opinions,” said Regling.

The German official also noted while Greece and its lenders may have different views on how the reforms should be implemented, Greece does not dispute the objectives of the reforms.

“[Greek prime minister] Tsipras had said several times in parliament that the current [pension] system is not sustainable, that it would be broke in five years.

“So there is agreement that it has to be reformed, but there are many different ways how to reform a pension system. None of them is easy. But it makes sense to argue about the difficult possibilities and find the best possible way”.

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