Brussels: Eurozone finance ministers are likely to start discussing debt relief for Greece on the sidelines of the IMF’s spring meetings in mid-April, if there is a deal by then with Athens on a reform package, Eurozone officials said.
Representatives of Greece’s official lenders are to resume talks with the Greek government from Monday on how to tackle non-performing loans in the banking system and pension and income tax reforms.
Negotiations on these reforms have been dragging on for months because they are politically very difficult for the left-wing government of Alexis Tsipras, elected on promises to end austerity.
Yet these measures are crucial for Greece to reach a sizeable primary surplus in 2018, when lenders hope it will be able to manage its own finances and borrow from the market at sustainable rates.
Without an agreement on the measures, Athens cannot get the next tranche of loans from the Eurozone bailout fund. It needs the money to pay back 3.5 billion euros ($4 billion) to the International Monetary Fund and the European Central Bank in July.
An agreement is also a crucial condition for any debt relief talks to start and a deal on debt relief is also a condition for the IMF to participate in the bailout programme for Greece.
“If the Greeks want to... have a disbursement well before July, there needs to be agreement on policies by around mid-April - and on 12 April everybody goes to Washington, so best before that,” one senior Eurozone official said.
“Only then can one start discussing debt issues in earnest, and that will take some time. And then at the end everything has to come together simultaneously,” the official said.
“For now everybody is working towards this - but the decisive factor is if the Greeks can pull their act together politically, there is no technically difficult issue anywhere,” the official said.
Many Eurozone finance ministers will participate in the spring meetings of the IMF in Washington on April 15-17, including all the biggest Eurozone members, as well as top representatives of all the key Eurozone institutions.
Euro zone officials said it was very likely that there would be a meeting of the ministers in Washington to discuss the Greek debt issue, as well as bilateral talks with Greek Finance Minister Euclid Tsakalotos and Eurozone institutions.
“I would find it very strange if it did not happen,” a second Eurozone official said.
“If there is an important agreement achieved by then on the package of reforms, then the only remaining topic to conclude the review of Greek reforms and bring the IMF in would be to discuss the debt relief, and it would be an appropriate setting to do that,” the second official said.
Senior IMF officials said in a transcript of a teleconference from March 19, released on Saturday by internet whistle-blowing site Wikileaks, that they expected talks on debt relief to start in Washington in mid-April after preparatory talks by deputy Eurozone finance ministers in the Eurogroup Working Group (EWG) next week.
“We can report progress on that EWG and basically we need to have this debt discussion that prepares the ministers for the following week, when they are thinking about April 15 or 16, on the sidelines of our Spring meetings,” the transcript of the/spurported conversation between Poul Thomsen, head of the IMF’s Europe department, and Delia Velculescu, leader of the IMF team in Greece read.
Talks on debt relief for Greece are likely to focus on extending maturities of existing loans from the Eurozone, lengthening grace periods and some minor interest rate adjustments, Eurozone officials have said.
There will be no write-off of principal, they have said.
