IMF and EU finance ministers’ meeting delivers small relief for Greece

According to latest reports, the International Monetary Fund (IMF) and the Eurozone remain at loggerheads over Greece’s €86 billion bailout and so far failed to reach a deal for the fund to join in. The bailout was agreed last year and since then the IMF has strongly advocated for unconditional debt relief to Greece as the current debt mountain at 175 percent of the GDP is clearly unsustainable. The participation of IMF is considered as vital to many countries in the Eurozone, Like Germany, and Netherlands, who feel that the participation brings in IMF’s vast knowledge and experience in this area as well as credibility to the program, not to say money.

According to the EU, Greece needs to sustain a surplus of 3.5 percent from 2018 and beyond but IMF feels that the target is too steep to sustain. The finance ministers of the Eurozone have called the IMF assessment too pessimistic. However, the chairman of the group, Jeroen Dijsselbloem has said that all ministers agree that they want IMF to participate. A statement from the group after the meeting says that IMF still plans to join the program as soon as possible. However, Mr. Dijsselbloem said that he is abandoning his original target to bring IMF into the program by the end of the year as it is unlikely to happen until next year.

The ministers could agree to only short-term measures that would bring down the debt to GDP ratio by 20 percentage points by next 40 years.