IMF urges EU to slim down its demands on Greece

Greece

The International Monetary Fund has urged EU negotiators to slim down their list of demands in debt talks with Greece amid fears that time is running out to reach a deal.

The intervention by one of the country’s three main lenders came as the UK chancellor, George Osborne, said the impasse posed the biggest immediate threat to the global economy.

Poul Thomsen, head of the IMF’s European department, said the reforms being demanded from Athens in exchange for a vital €7.2bn (£5.2bn) in rescue funds should be simplified and slimmed down.

European finance ministers and senior officials have warned that Greece is running out of time to secure the payment and avert a disorderly exit from the eurozone.

Osborne said the situation in Greece was “the most worrying for the global economy”.

Speaking at the IMF’s spring meeting in Washington,he said discussions about Greece had “pervaded every meeting” and that “the mood is notably more gloomy than at the last international gathering”.

He added: “It’s clear now to me that a misstep or a miscalculation on either side could easily return European economies to the kind of perilous situation we saw three to four years ago.”

Osborne’s German counterpart, Wolfgang Schäuble, repeated his criticism of the radical left Syriza government’s negotiating tactics and warned that it was harming the economy.

He said Greece was in a “very difficult situation” after Syriza demanded a new deal with its creditors – the IMF, the EU and the European Central Bank – which had delayed reforms and hit the country’s already struggling economy.

Schäuble said it was unlikely that next week’s deadline for Athens to submit reform proposals would be met. The reforms are scheduled to be discussed at a meeting of eurozone finance ministers in Riga, Latvia next Friday, followed by a further gathering in Brussels on 11 May that is being seen as the crunch point for Athens.

Greece is scheduled to make a €747m repayment to the IMF on 12 May and there are fears that Athens will be unable to meet the deadline as cash runs out of state and domestic bank coffers.

Pierre Moscovici, the European commissioner for economic and financial affairs, said the next two meetings should both be used by the Greeks to find a compromise deal.

“The 24 April meeting in Riga must not be a wasted moment; it must be a useful moment in which we see concrete progress in catching up with those reforms, and then the next meeting on 11 May, which certainly must be decisive,” he said.

The former French finance minister, who sought to make peace with the Syriza government soon after its formation following elections in January, made it clear that Athens was still not “precise enough” in its reform plans.

“We are not talking about nothing. We are talking about things, but now we need to make progress”.

The EU has come under pressure from other quarters to drop its demand for a complex list of detailed reforms in favour of a simpler programme that Athens can agree and implement.

This week the IMF’s financial stability report highlighted the risks of a Greek exit from the euro, arguing it would create shockwaves with unknown consequences.

Thomsen’s intervention was seen as an olive branch to Athens after IMF officials rebuffed an informal request by the Greek finance minister, Yanis Varoufakis, for a delay in debt payments.

Varoufakis has denied asking for a suspension or delay of payments while negotiations are ongoing, arguing that talks can continue until the current bailout programme runs out in June.

He said: “There has never been a key date. We have to see everything in combination and cumulatively. On the 24th [April] there will not be a solution, there will be progress.

“The issue is what we do in the post-June period. Our goal is a good agreement [after that date], an agreement with a different take on the situation from previous agreements which only prolonged the problem.”

Athens would not “leave any stone unturned” to get to a deal, he said.

However, Osborne said finance ministers wanted an earlier deal to prevent Greece from running out of money and triggering financial disruption across Europe by the Greeks leaving the eurozone.

He said: “The crunch appears now to be coming in May, and it would be a mistake to think that the UK would be immune to a return to this instability in European financial systems and the European economy.”

Powered by Guardian.co.ukThis article was written by Phillip Inman in Washington, for theguardian.com on Friday 17th April 2015 17.41 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010

 

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