Greek PM calls for EU investment to break debt deadlock

Greek Prime Minister, Alexis Tsipras speaks during a joint statement held on the occasion of the Southern European Countries Summit, at El Pardo Palace. Madrid, 10 April. [Juan Carlos Hidalgo/EPA]

Greece’s Prime Minister Alexis Tsipras on Wednesday (7 June) urged the EU to commit to investment aimed at boosting Greek growth in order to break a deadlock between European creditors and the IMF over the nation’s debt.

“The key to overcoming the disagreements” between the IMF and the eurozone on measures to alleviate Greek debt is to reduce their “differences of estimation on Greek growth in the medium and long term,” Tsipras said in a speech.

To do this, “Europe should undertake initiatives and commitments for investment programmes that will boost Greek growth.”

Talks over Greece’s debt mountain — which stands at 179% of GDP — have been paralysed for months by disagreements between the International Monetary Fund and European creditors led by Germany.

Eurozone fails to reach Greece debt deal amid IMF row

Eurozone finance ministers failed to reach a deal for fresh bailout cash for Greece yesterday (22 May), as a row with the International Monetary Fund over debt relief dragged on.

The EU expects Greece’s economy to grow strongly and its government to bring in large surpluses in revenue in the coming years, allowing it to pay down its debts.

But the IMF is less optimistic, arguing there must be further relief for Athens before it can label its debt sustainable and justify loaning Greece any more cash.

German leaders are reluctant to offer yet more unpopular debt relief ahead of their nation’s elections in September, but have also promised lawmakers that the IMF will remain on board.

Greek government spokesman Dimitris Tzanakopoulos said earlier on Wednesday that EU leaders could be asked to step in and avert deadlock if ministerial talks on Greek debt fail next week.

“If the disagreements continue… the discussion could be pursued at the European summit” on 22-23 June, “We are not ready to just accept whatever is proposed to us,” he said.

But he added: “We are working towards a solution” at a meeting of eurozone finance ministers on 15 June, an outcome he described as the “most probable”.

Clarity

On Tuesday (6 May), IMF director Christine Lagarde said the global lender could sign on to a deal between Greece and its creditors before the debt relief measures it demands have been agreed.

“There can be a programme in which the payment does not take place until debt measures have been clearly defined by the creditors,” she told German business daily Handelsblatt.

Her proposal to agree on the outline of a programme including the IMF, but withholding disbursement of funds until debt relief details are nailed down, is similar to one proposed at the last Eurogroup meeting of eurozone finance ministers in May, which ended without an agreement.

Tzanakopoulos said Athens wanted creditors to specify “with the greatest possible clarity” measures that would lower Greece’s gross financing needs to 15% of output after 2018.

Berlin says any discussion about debt relief must take place after the end of the €86 billion third bailout programme agreed in 2015, which runs until the middle of next year.

Greek parliament approves more austerity to unlock bailout funds, debt relief

Greek lawmakers on Thursday (18 May) approved pension cuts and tax hikes sought by the country’s lenders to unlock vital financial aid, as angry demonstrators protested outside parliament over new austerity, the latest since the country plunged into crisis seven years ago.

Pressure is on to reach a deal so that Greece can make a payment of around €7.5 billion that falls due in July.

All sides are keen to avoid a repeat of the impasse in 2015, before the latest bailout was agreed, that almost saw Greece pushed out of the euro.

The European Central Bank last week called for creditors to create “clarity” at their next meeting on 15 June by striking a deal that restores investors’ confidence in Athens — allowing the Greeks to turn to financial markets for cash in future.

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