Dutch Say Greek Program Involvement Hinges on IMF SupportBy
IMF, euro-area creditors disagree on Greek fiscal targets
Greek bond yields rose to the highest level since September
The Netherlands won’t maintain participation in the Greek bailout if the International Monetary Fund withdraws its support, raising the stakes in a quarrel between the fund and the nation’s European creditors over how to implement an aid package.
“IMF involvement is necessary,” Jeroen Dijsselbloem, Dutch finance minister, told lawmakers on Wednesday in The Hague. “The majority in parliament is very clear, that if the IMF will not take part or withdraws, then support for the program will be lost.”
Talks stalled between Greece and its international creditors over how to complete a review of its 86 billion-euro ($92 billion) bailout after the IMF questioned the nation’s economic and budget targets as well as its debt sustainability. The impasse needs to be bridged by the time euro-area finance ministers meet on Feb. 20, their last gathering before European elections make an agreement politically difficult.
Yields on Greece’s notes due in 2019 rose to 9.46 percent on Tuesday, the highest since September, before falling to 9.12 percent at 3:34 p.m. in Athens. The 4.75 percent notes were sold in April 2014 as part of a series of flagship sales that marked Greece’s brief return from market exile.
Greece won’t meet fiscal surplus targets set by its euro-area creditors, the IMF said this week, after executive directors met to discuss the fund’s annual assessment of the nation’s economy. Greek Finance Minister Euclid Tsakalotos said the IMF’s assessment was not based on recent evidence, while Bank of Greece governor Yannis Stournaras said it downplayed progress on the financial sector and was unduly pessimistic.
Asked about the controversy during a forum in Washington on Wednesday, IMF Managing Director Christine Lagarde said she wasn’t surprised Greek authorities were upset by some of the fund’s findings. She said too few people are still bearing the burden of taxation, and that pension reforms are still needed.
“We tried, in full honesty, to be those ruthless truth-tellers,” she said. “We also acknowledged that some reforms were conducted. But what is generally picked up by those who do not like all of it, is the fact that we also said that some reforms were still to come, were not completed, had not yet delivered the benefits that were expected.”
— With assistance by Ian Wishart, Austin Weinstein, and Marcus Bensasson