Athens, Greece. Having just bent for Ukraine to accommodate the failed corruption court initiative, Greece is finding the IMF bending over backwards to dump more free money on states in financial distress across europe.
Just days ahead of a key June 15 meeting of EU finance ministers, and a month before Greece owes a $7.8 billion repayment to its European creditors, IMF chief Christine Lagarde told German officials her bank is once again on board with a bailout for the troubled Greek economy, provided Greece’s creditors can find some “way to offer Athens debt relief.” Lagarde said.
“There can therefore be a program in which the disbursement of a tranche only takes place when the debt measures have been clearly outlined by the EU creditors.” Lagarde added.
The IMF has long demanded the EU forgive some of the $355 billion debt that Greece has run up with its creditors if it wanted continued IMF participation. Outside of Germany, many other EU members, including France, are sympathetic to the IMF’s argument about debt relief for Greece.
Very few EU members think the country can ever pay back what it has had to borrow to stay afloat after its economic implosion following a financial crisis years in the past now. But it needs some debt relief so that it can tackle its financing woes in the current global capital markets, rather than going cap-in-hand to European neighbors.
Germany has long refused. German Finance Minister Wolfgang Schaeuble has ruled out a debt redo for Greece as a violation of European rules, arguing it would have to leave the euro in exchange for debt concession.
The IMF concession is welcome for Berlin, but may not go far enough. German officials have indicated the IMF’s participation in the fund, would allow them to release additional, sorely-needed bailout funds.
With the IMF agreeing to delay demands for immediate debt relief, European officials, including those in Germany, have indicated they will move forward with the upcoming payment. That could allow Greek Prime Minister Alexis Tsipras to keep the lights on over the summer.
Without the latest tranche of bailout funds, Tsipras was heading toward a repeat of the summer of 2015, when Greece defaulted on debt, then led a referendum to reject European austerity demands, and then caved and promised spending cuts to get bailout funds.