Greece should leave the eurozone and then be given debt relief, the head of Germany’s pro-business Free Democrats (FDP) told German radio today (9 February), as a dispute between the eurozone, the IMF and Greece itself continues unabated.
FDP leader Christian Lindner told Deutschlandfunk that Greece should remain in the EU, so it can get subsidies to put into infrastructure or help small- and medium-sized businesses, but that it should leave the single currency.
“It’s clear that Greece needs to have its debts written off,” Lindner said. “Greece’s debts can only be written off outside of the euro zone, so we’re talking about Grexit.”
Recent polls put support for the FDP, which was the junior coalition partner to Chancellor Angela Merkel’s conservatives from 2009 to 2013, at 5-7%. That suggests it will get enough support to cross the 5% threshold to enter the lower house of parliament in 24 September elections.
Lindner said Greek Prime Minister Alexis Tsipras did not intend to implement agreed reforms, so the strategy needed to be changed.
The German government wants the International Monetary Fund to have a stake in Greece’s bailout to give the rescue plan greater credibility. But it opposes granting Athens the significant debt relief that the IMF is demanding.
IMF chief Christine Lagarde defended her organisation’s pessimistic outlook for the Greek economy, saying yesterday (8 February) the fund must be the “ruthless truth teller” even if some do not like the analysis.
The IMF and Greece are at odds over the outlook for the troubled European nation’s economy, a split that likely will continue to hold up further IMF financing.
Greece Finance Minister Euclid Tsakalotos said the IMF report on the economy, released Tuesday (7 February), “fails to do justice” to his country by underestimating growth and the progress made through years of sacrifice.
But Lagarde said following a speech that the fund in the review of the Greek economy “tried in full honesty to be those ruthless truthtellers” despite the criticism.
The reports highlighted that despite a “massive effort” by the Greek people some of the reforms are incomplete, including changes to the pension and income tax systems, where too few people bear most of the tax burden, she said.
“Somebody can ask me the question three times over, I will still say the same thing.”
The IMF said Athens is relying on overly optimistic calculations for its estimates of growth and budget.
But the EU said on Tuesday that Greece’s economy remains on track despite the IMF’s withering opinion about its “unsustainable” debt and calling for further European debt relief.
“We continue to believe that the commitments reached for the programme are both credible and ambitious,” said Annika Breidthardt, a spokeswoman for the European Commission.
In addition, Eurogroup head and Dutch Finance Minister Jeroen Dijsselbloem said that he had been “surprised” by the IMF’s tough tone, saying: “Greece is already doing rather better than what is described in the report.”
Last week, Finance Minister Wolfgang Schäuble said Greece must meet commitments it has made under its international bailout plans or else it will end up in an impossible position.