The International Monetary Fund isn’t negotiating a second rescue package for Greece while it weighs whether to approve the next payment of the country’s initial program, acting IMF head John Lipsky said.
“We are not negotiating a new program,” Lipsky said today in a press conference in Luxembourg. “There always exists that possibility, but there has been no request by the Greek authorities to negotiate such a new program. We are concentrated today on the existing program and what is needed to put it back on track and to therefore allow the next disbursement.”
Greece was due to receive the fifth payment of its original 110 billion-euro ($157.5 billion) rescue this month. Under the original bailout, Greece was due to return to markets and sell about 30 billion euros in bonds next year. The country remains shut out of markets and the IMF has called on the EU to come up with a plan to close that funding gap before it will release its funds.
Lipsky’s comments came after European officials opted to delay decisions on the next payment until July, along with any discussion of a follow-up program. European estimates put Greece’s 2012-14 financing gap at as much as 170 billion euros, which would be filled by about 45 billion euros of new loans, plus around 57 billion euros in unspent aid from the 2010 bailout, roughly 30 billion euros in asset-sale proceeds and about 30 billion euros from creditors.
The European deliberations took place amid a Greek parliamentary debate in Athens over a confidence vote tomorrow in Prime Minister George Papandreou’s new cabinet. Finance ministers including Germany’s Wolfgang Schaeuble have said this week that Greece must meet conditions in order to receive its next slice of financial aid.
“The most important steps are those that are going to be taken in Greece by the Greek authorities in adopting and implementing the very ambitious program of structural reforms necessary to heal that economy and set the stage for renewed growth,” Lipsky said in a Bloomberg Television interview on “Surveillance Midday” with Tom Keene today.
He called the adjustment required in exchange for the loan “very substantial but not unprecedented.”
Lipsky said the Greek program needs “mid-course corrections” that are “not trivial” in order to move forward. He said it isn’t so much “what went wrong” with the package as the “exceedingly difficult” market conditions when the plan was put in place.
Earlier today, the IMF chided European leaders for “unproductive debate” about whether to restructure or reprofile Greece’s debt. Lipsky told reporters that he had wanted to remove the word “unproductive” from the final statement.
“In the wake of the discussion, there’s a real progress being made to bring this to a close,” he said of Greece’s existing rescue package and the review needed to assure a new aid package.