The Best of GRReporter
flag_bg flag_gr flag_gb

Greece divorces the IMF

12 October 2014 / 16:10:12  GRReporter
1976 reads

Time is elapsing and creditors and the Greek government are facing difficult decisions about the model of exiting the Memorandum with or without a safety net, the new surveillance system and the new debt restructuring, a "passport" for easier access of the country to the markets.

The difficult financial diplomacy operation, which has already begun at political level, will have its first stop at Washington, the Greek government desiring to be released from the memorandum, while at the same time further measures are taken for debt relief in order to facilitate the rise of Greek bonds and the raising of new capital to the amount of 10 billion Euros. Apart from the Minister of Finance, Gikas Hardouvelis, the meeting will be attended by the Governor of the Bank of Greece and former Finance Minister, Yannis Stournaras, and the adviser to the Prime Minister, Stavros Papastavrou.

On the part of the IMF, head of the European office of the Fund, Paul Thomsen, and head of the Greek programme, Rishi Goyal, are expected to take part.

The main topic of the meeting will be the roadmap for the "divorce" of Greece and the IMF, as the bailout agreement with the European partners ends on 31 December 2014, but contributions from the Fund have been envisaged until 2016.

The IMF's proposal for turning a new page in relations with Greece stipulates two visits a year and "a preventive line of support".

It seems that the Greek side has no objection to this, although they have reported that they did not want 15 billion Euros from the Fund afterwards.

Greeks believe that Greece can actually cover its needs without help, and the "safety net" offered by Christine Lagarde regards markets as well as other factors that could accelerate the Greek economy.

The Fund believes that Greece, as well as any other country in this position would be fully protected from the markets if it continues its relationship with the IMF. In addition, the Fund believes that the Greek government should not hurry, but follow the explanations of Christine Lagarde and her collaborators instead, and also that Greece will have the full support of the Fund in an attempt to get out of the memorandum

"Everyone thinks that Greece, as was said at the meetings of the IMF, is moving much better than expected. This is important and everyone is interested for this progress to continue", Yannis Stournaras told the Athens News Agency, and as to whether Greece goes into the next phase, he replied: "That's what we want. To move forward to a new type of relations”.

Yannis Stournaras andGikas Hardouvelis

"We're talking about negotiating various types of speed, but this time we have no time and all parties understand it", said a source close to the troika, who closely monitors the political developments in Greece and the serious possibility of new elections in early 2015.

Under pressure

The first major hurdle is the need for Greece to pass with "excellent" the examination of the troika, so as to send a strong message to markets that it is aware of its obligations.

The other big bet is for Greece to stave off the pressure of the Europeans, that had been publicly manifested by Mario Draghi, for the extension of the eurozone credit programme at least by 1 year and to waive remaining loans from the IMF.

The next two months before the meeting of the Eurogroup on 8 December and the EU summit on 18 December will be crucial.

The knot will start to unravel with the resumption of negotiations with the troika in November. Differences between the two countries are still significant and efforts will be made to find the right balance for the new security system, for the collective dismissals, for the trade union law, for the payments in the public sector, for the changes in the VAT regime, and also for the financial terms for 2015 to be closed, which will be reflected in the final budget version.

Tags: International Monetary Fund Gikas Hardouvelis Yannis Stournaras Christine Lagarde memorandum
GRReporter’s content is brought to you for free 7 days a week by a team of highly professional journalists, translators, photographers, operators, software developers, designers. If you like and follow our work, consider whether you could support us financially with an amount at your choice.
You can support us only once as well.
blog comments powered by Disqus