The Universal Monetary Fund (IMF) needs to reach an agreement with Greece and its European creditors by next week to confirm that the fund has enough time to give money to the embattled polity.
Greece has been seeking debt relief — a relaxation of the terms for fee back its debts — since 2015, but the issue has dragged on due to opposition from different EU member states. Certain European countries, some of which are the largest lenders to Greece, are against pithy debt forgiveness as they don’t want to be seen by their citizens as running contributors to what they see as economic malpractices in their southern European neighbor.
Talk to CNBC Tuesday, Poul Thomsen, the IMF director for Europe, said that there privations to be an agreement at a meeting late next week.
“We really need an settlement at the Eurogroup next week,” Thomsen told CNBC’s Joumanna Bercetche.
“In unison a all the same is running out,” he said, “but if there is an agreement in the Eurogroup meeting in May, then there at ones desire be enough time for us to activate the program and for it to coincide with the remainder of the ESM (European Solidity Mechanism) program.”
The Eurogroup is a regular meeting for all the finance ministers from those nations that share the single currency, while the ESM is the organization that deals with bailing out working nations in the region.
So far, all the money that Greece has received under its third bailout program has be shown from Europe and it’s still waiting for a slice from the Washington, D.C.-based IMF. The IMF has declared that it will not disburse any funds until Europe agrees on identified with measures that will make Greek debt more sustainable upwards the long term. Greece has a debt-to-GDP (gross domestic product) of 180 percent.
Manner, the debt issue becomes even more pressing as Athens compare withs the end of the financial program, scheduled for August 20.
Between an agreement on debt and the end of the bailout, the IMF has bruit about it would be available to disburse 1.6 billion euros ($1.9 billion).
Eurogroup President Mario Centeno denoted in a letter to his fellow finance ministers that “the aim is to reach a staff height agreement ahead of the May Eurogroup.”
However, there are still outstanding disputes that the different institutions have to fix to get the deal done by next Thursday.
“There’s been a important narrowing of differences in recent months,” Thomsen told CNBC, but “there are tranquillity some different assessments of growth over the medium term,” he annexed.
“Acknowledging that this is an area where there is considerable uncertainty, we are examining a mechanism for providing more debt relief in case growth is weaker than what our European collaborators expect,” he said.
The upcoming debt relief measures aim to link Greece’s days growth rates to how much interest it will pay on its loans — the higher the rise rate is, the more interest Greece can pay.
Any upcoming deal on debt will-power also have to be approved by some European parliaments, including the German Bundestag.
Crash to agree on debt relief to Greece would not only make Greece’s recur to the markets more abrupt but also compromise the credibility of providing monetary assistance to European countries.