Greek finance minister – extending fiscal contingency steps may break EU/IMF stalemate

01 Jan, 2017 12:34 pm

ATHENS – Greece is open to extending a contingency mechanism to ensure it will meet fiscal targets beyond 2018 to break a stalemate in talks with its euro zone lenders and the IMF over its second bailout review, its finance minister said on Saturday.

Greece’s official creditors are assessing its performance against reforms and fiscal targets set in its bailout programme of up to 86 billion euros (73.24 billion pounds) agreed last summer, its third since its debt crisis exploded in 2010.

A rift between the European Union and the International Monetary Fund over Greece’s medium-term primary surplus targets has clouded Greek hopes for a swift conclusion of the review.

“In the extremely unlikely case that the IMF breaks its impressive series of (failed forecasts) and one of its projections is confirmed, we can describe measures that may be needed in this case,” Euclid Tsakalotos told Kathimerini newspaper in an interview.

“In this context we are discussing a commitment mechanism such as extending the budget’s automatic fiscal adjustment,” he said.

Differences in forecasts of Greece’s primary budget surplus in 2018 between euro zone lenders and the International Monetary Fund forced Athens in April to commit to fiscal contingency steps if targets are missed.

Asked if the IMF, which has yet to commit to funding Greece’s third bailout, wants to exit the aid programme or stay on just as a technical adviser, Tsakalotos said:

“I really don’t know what the IMF wants, the fund itself does not know what it wants. There are many solutions to conclude the present phase of negotiations and one of them can have the IMF on mainly as a technical adviser.”

Noting that markets know how to assess the credibility of the aid programme, he said the crucial questions for investors include whether they will have a “clear and secure corridor” to invest in Greece, whether the country will join the ECB’s asset buying scheme and regain bond market access. -Reuters

Must Watch