Greece, Creditors Take Time Out to Attend IMF Spring Meeting

  • Tsakalotos sees initial deal before April 22 Eurogroup session
  • Creditor talks to resume on return from Washington gathering

Greece will take a one-week break in bailout review discussions with its creditors after failing to reach an initial agreement, as officials from the Greek government, the euro area and the International Monetary Fund fly to Washington.

Officials decided to pause so they can attend the IMF’s spring meeting, Greek Finance Minister Euclid Tsakalotos told reporters in Athens on Tuesday. Talks will resume after that, with the aim of reaching an accord with staff-level officials from the European Commission, the European Central Bank, the European Stability Mechanism and the IMF before an April 22 euro-area finance ministers’ meeting, or a few days after that, he said.

Greece is targeting the staff-level deal then so that discussions about debt relief can begin immediately following an accord. Talks continued in Athens over the past week with a number of issues remaining open, including pension reform, taxation and management of non-performing loans.

“We fully agree with the IMF on the need for a strong policy package,” ECB Executive Board Member Benoit Coeure said in an e-mailed statement Tuesday. “The aim of this discussion is the conclusion of the first review of the MoU,” as the bailout is known, “and a new program with the IMF,” he said.

The government will submit separate bills on pension and tax reform to parliament next week, to be voted on by the end of the month, even though there’s not yet full agreement with the country’s creditors in these areas, Tsakalotos said. Each of these will yield budget savings of 1 percent of gross domestic product, he said.

‘Stumbling Blocks’

“Despite the optimistic message echoed by several government officials in the last few days over an interim agreement document ahead of the creditors’ departure from Athens, it appears there was not enough convergence between the two sides,” Eurobank Equities said in a note to clients Tuesday. “Key stumbling blocks” remain “the NPL framework, the income-tax-free threshold and the extent of reductions on supplementary pensions,” it said.

The talks are complicated because the creditors often disagree among themselves, and the IMF is the only institution that doesn’t think the numbers “add up,” Tsakalotos said. “We want an agreement that satisfies all the creditors but also covers our red lines,” he said.

European Economic Affairs Commissioner Pierre Moscovici said he will press for progress on reducing Greece’s debt burden at the meetings in Washington, according to an interview in Le Monde newspaper.

While the goal “is to conclude talks as soon as possible,” the ball is in Greece’s court, European Commission Vice President Valdis Dombrovskis said Monday, adding that an accord is possible in the “next few days or weeks.”

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