Greece and its international lenders adjourned bailout review talks on Tuesday, potentially delaying a crucial cash handout to the debt-stricken nation, and will resume them immediately after this week’s IMF spring meetings.
Greece’s review of progress, under a bailout deal reached last July, has dragged on for months, largely due to differences among the lenders over its projected fiscal shortfall by 2018 and resistance from Athens over unpopular measures.
Athens signed up to a new bailout worth up to 86bn last year, its third international rescue package since 2010.
A positive review will unlock up to 5bn in bailout aid which Athens needs to repay 3.5bn to the International Monetary Fund and the European Central Bank in July, as well as unpaid domestic bills.
Mission leaders of European institutions and the IMF will return to Athens after the April 15-17 IMF meetings in Washington with a view to concluding an agreement by April 22, when eurozone finance ministers are scheduled to meet, Finance Minister Euclid Tsakalotos told reporters.
“The Greek government and the four institutions agreed there was progress,” Tsakalotos said, referring to European institutions and the International Monetary Fund. Tsakalotos will also travel to Washington for the meetings.
European Union institutions and the IMF are at odds over the primary surplus Greece could hope to achieve by 2018 – the EU sees the balance at 3.5 per cent of national output. The IMF says that forecast is too optimistic and says it will be closer to 1.5 per cent of GDP.
With Athens itself, divergences hinged on the depth of pension reform and regulating non-performing loans, particularly those involving primary home mortgages.
Reflecting growing uncertainty over the review, Greek bank shares dropped almost five per cent by mid-session.
“The negotiation with the lenders should have been concluded long ago,” government spokeswoman Olga Gerovasili said, adding that Athens’ proposals were comprehensive but the IMF stance was not helping reach a deal.
“Greece has categorically stated that it will meet to the letter the July (bailout) agreement, and underlines all those involved in the negotiations should do the same,” she said.
The publication by WikiLeaks last week of a transcript detailing IMF tactics on Greece, has added to growing tension.
The IMF is expected to decide whether to co-finance Greece’s third bailout after the review and in light of how much debt relief Greece receives.
An ECB spokesperson said “good progress” has been made in all areas during the Athens-based talks, however another source close to the talks there were many outstanding issues.
In an effort to show that Greece’s lenders were on the same page, executive ECB board member Benoit Coeure backed the IMF.
“We fully agree with the IMF on the need for a strong policy package. The aim of this discussion is the conclusion of the first review of the MoU and a new programme with the IMF,” he said in a statement.