Cyprus Mail

Greece demands IMF explanation over leaked debt transcript (Updated)

Alexis Tsipras

By Lefteris Papadimas

Greece demanded an explanation from the International Monetary Fund after an apparent leaked transcript suggested the IMF may threaten to pull out of the country’s bailout as a tactic to force European lenders to offer more debt relief.

EU/IMF lenders will resume talks on Greece’s fiscal and reform progress in Athens on Monday, aiming to conclude a bailout review that will unlock further loans and pave the way for negotiations on long-desired debt restructuring.

The review has been adjourned twice since January due to a rift among the lenders over the estimated size of Greece’s fiscal gap by 2018, as well as disagreements with Athens on pension reforms and the management of bad loans.

Greek Prime Minister Alexis Tsipras’s office said on Sunday that Tsipras had asked IMF Managing Director Christine Lagarde to clarify the Fund’s stance, after Internet whistleblowing site WikiLeaks published what it said was the transcript of a March 19 conference call of three senior IMF officials.

The officials were discussing tactics to apply pressure on Greece, Germany and the EU to reach a deal in April. They were quoted as discussing a threat that the fund might not participate in Greece’s third bailout programme as a way to force EU creditors, especially Germany, to reach a deal on debt relief before Britain’s June referendum on whether to stay in the European Union.

“He (Tsipras) sent a letter to Lagarde last night, asking her to clarify the Fund’s official stance in the negotiations,” an official at Tsipras’ office told Reuters. “He also expressed his concern about the credibility of the negotiations after the leaks.”

An IMF spokesman in Washington said on Saturday that the Fund was not commenting on “leaks or supposed reports of internal discussions” but added the IMF had made its position known in public.

“We have stated clearly what we think is needed for a durable solution to the economic challenges facing Greece – one that puts Greece on a path of sustainable growth supported by a credible set of reforms matched by debt relief from its European partners,” the spokesman said.

German government and finance ministry spokespeople declined to comment on the leaked transcript.

Germany has in the past said the IMF is an important player in the Greek rescue but it does not support the debt relief demanded by the IMF. Some German officials also say that they believe there are different views on Greece within the IMF.

German Chancellor Angela Merkel is due to meet Lagarde in Berlin on Tuesday.


The purported conversation on the conference call involved Poul Thomsen, head of the IMF’s Europe department, Delia Velculescu, leader of the IMF team in Greece, and IMF official Iva Petrova.

They discussed whether Greece could apply more austerity as a condition for receiving more aid ahead of big debt repayments in July and voiced frustration at the European Commission’s reluctance to side with IMF pressure on Athens.

They also suggest that Brussels is sticking to unrealistic assumptions about Greece’s budget shortfall to minimize the need for debt relief, which is unpopular with Germany and other northern euro zone hawks.

If concluded the review will unlock a fresh tranche of about 5 billion euros ($5.7 bln), which Greece needs to pay off state arrears and European Central Bank and IMF maturing debt. Greece has no major debt redemptions due until July.

The Greek government interpreted the leak as revealing an IMF effort to blackmail Athens with a possible credit event to force it to give in on pension cuts which it has rejected.

However the transcript, if genuine, appeared to suggest Thomsen saw more prospect of the IMF applying pressure on Chancellor Merkel to concede debt relief to keep the Fund involved in the bailout and secure Greek cooperation in managing Europe’s pressing refugee crisis.

“Basically we at that time say “Look, you Mrs Merkel you face a question, you have to think about what is more costly: to go ahead without the IMF, would the Bundestag say ‘The IMF is not on board’? or to pick the debt relief that we think that Greece needs in order to keep us on board?” Right? That is really the issue,” Thomsen was quoted as saying.

Last month German Finance Minister Wolfgang Schaeuble said alternatives would have to be found if Athens could not deliver on pension reforms and the debate about Greek debt sustainability was not pressing.

Commenting on the leak, Tsipras told weekly newspaper Ethnos: “It seems that some people are playing games with an aim to destabilize us. We will not allow (IMF’s) Thomsen to destroy Europe.”

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