Thursday, June 15, 2017

Greece to Get Some Cash-And Some Idea of Future Debt Relief

By REUTERSJUNE 15, 2017, 8:54 A.M. E.D.T.
 The New York Times

LUXEMBOURG — Greece's international lenders prepared on Thursday to unblock as much as 8.5 billion euros (7.44 billion pounds) in loans that Athens desperately needs next month to pay its bills, and to give some idea of what debt relief they may offer over the long-term.

The chairman of euro zone finance ministers Jeroen Dijsselbloem told reporters the size of the payment to Athens would be discussed during the meeting, since lenders agreed that Greece had pushed through all the requested reforms.

Euro zone officials who had prepared the talks have earlier discussed a loan in the range of 7.4 to 8 billion euros, but decided at a meeting on Thursday morning to recommend to finance ministers a sum of 8.5 billion, one euro zone official said.

Dijsselbloem also said the ministers, who were being joined at a meeting in Luxembourg by International Monetary Fund Managing Director Christine Lagarde, would seek to meet Greek and IMF demands for clarity over long-term debt relief.

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The new loan disbursement hinges on a condition set by the German parliament that the IMF joins the Greek bailout, now shouldered only by the euro zone. It is seen as giving economic legitimacy to the programme.

But to join, the IMF wants not only for Greece to complete reforms, but also for the euro zone to give more details on what debt relief it would offer Greece in 2018, when the latest bailout ends.

"Today we will give more clarity to Greece and to the IMF (on) how we will move forward, how we will calibrate debt relief needed next year," Dijsselbloem said.

"There won't be a figure that rolls out... The figure will only come at the end of the programme," he said.

Debt relief talk has been a hard sell in Germany, the biggest contributor to the Greek bailouts, which faces elections in September and does not want to anger its bailout-weary voters with discussions of relief for Athens.

Berlin wants to retain some leverage over the Greek government to make sure reforms remaining under the bailout are implemented.

The IMF's Lagarde suggested last week that the Fund may join the bailout "in principle" on the strength of the implemented reforms, but wait on disbursing its own money to Athens until details of the 2018 debt relief are clear.

IMF participation, even without immediate disbursements, should be enough for the German parliament to back new euro zone loans to Athens, thus ensuring Greece would get enough cash in July to repay maturing debt and avoid default.


The euro zone has been reluctant to commit to concrete debt relief numbers now because it argues that if Greece does all that is required of it and keeps a high primary surplus - the budget before debt servicing costs - for decades, it may not need any debt relief at all.

The IMF, however, says euro zone assumptions on Greek economic growth and the country's ability to keep a high primary surplus are unrealistic and that Athens clearly needs debt relief if it is to win back investor confidence and return to market financing.

Pressure is also mounting at home on Greek Prime Minister Alexis Tsipras from a public weary of austerity.

Greece says it has done its part after legislating further pension cuts and tax hikes demanded by lenders to convince the IMF to participate.

"Greece has fulfilled its commitments and adopted the required reforms. Now it is time for the Europeans to comply with their commitments on debt relief," Greek President Prokopis Pavlopoulos said in an interview with German daily Handelsblatt.

In Athens, some 1,500 pensioners gathered to protest more than a dozen rounds of pension cuts since bailout-induced austerity was enforced seven years ago.

"We have been robbed blind," said Stavros Vassiliou, 65, "I worked 41 years in construction … I was taking 2,400 euros in 2011, now I take (a pension) of 1,000."

Greece's economy has improved, but unemployment is still running at more than 23 percent, around 45 percent for youth.

Athens wants a debt relief agreement "that gives clarity to the markets, but of even greater importance, renewed hope to the people of Greece", a government official told Reuters before the meeting.

(Writing by Jan Strupczewski and Phil Blenkinsop; Editing by Jeremy Gaunt)

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