Brussels, 16/11/2012 (Agence Europe) - Uncertainty was the key word on Friday 16 November 2012 about whether Greece's lenders would reach agreement on the viability of the Greek debt at the Eurogroup meeting on Tuesday 20 November.
The European Commission said it was working hard with the other troika partners (ECB and IMF) and contact with the member states to get the outstanding issues settled to make it easier to reach agreement on 20 November. Christine Lagarde, IMF director general, wouldn't predict whether Eurogroup would reach agreement: “You know, it's not over until the fat lady sings.” The IMF does not share the views of Europe about getting Greece's debt trajectory back on track. Lagarde said the debt had to be put on a “sustainable basis, so Greece can recover, can get back on its feet, can re-access markets as early as possible.” On Thursday, IMF spokesman William Murray said that the debt-GDP ratio for Greece must be reduced to 120% by 2020, not 2022 as Europe seems prepared to allow (but not Germany). In order to calm nerves, Germany says that there is no danger of the IMF withdrawing from the aid programme.
The second area of dispute is how the debt reduction is to be achieved. Murray said the eurozone would certainly have to act as the IMF has already done its job by reducing its interest rates on loans to Greece in March this year and extending the maturity date. Europe should agree to a light write-down on its Greek bonds, he said, but this is a question over which the eurozone does not agree.
Other voices are calling for greater efforts from Europe. The president of the Bundesbank, Jens Weidmann, said he felt the question of a new Greek bond write-down was an open question, but this would not solve all Greece's problems, even if it went ahead.
If agreement in principle is reached on Tuesday, then the eurozone would immediately release the next batch of aid, more than €30 billion. The final report of the troika (the European Commission, the European Central Bank and the IMF), which will be used by the eurozone in deciding on disbursement, is expected to be handed to finance ministers (according to an EU source), but it would only be an update of the preliminary report. A positive sign is that the head of Eurogroup, Jean-Claude Juncker, said that Athens had kept its promises.
Once the next batch of aid has been released, disbursement of it will still need to be approved by national parliaments, including the Bundestag, which has not yet set a date for the vote. The Finnish and Dutch parliaments also need to vote on it.
Athens avoids default. Faced with the late arrival of aid from Europe, Greece raised €5 billion in short-term bonds this week to pay its bills, thus meeting the Friday 16 November deadline. (EL/transl.fl)