Reuters: The IMF will stay out of Greek bailout

Reuters: The IMF will stay out of Greek bailout

Athens, October 10, 2016/Independent Balkan News Agency

The IMF will not participate in the Greek program, but will likely accept a special advisory status, with limited powers, which will maintain the Fund at the table, according to Reuters, citing two senior sources with direct knowledge of the proposals.

For over a year, the IMF has been insisting on conditions under which it agreed to participate in any new program, arguing that the economic objectives set out in the European project is unrealistic, without significant debt relief.

Given the European resistance in relief, now the Fund is in talks to accept a new role that will enable it to play a role with little formality, say Reuters sources.

“It will be more than an advisor but the role will not have the strict conditionality, like the compliance and economic health checks every three months,” one of the sources said.

Discussions between Greece, its European lenders and the IMF have reached an impasse, since German Finance Minister Wolfgang Schäuble insisted on the IMF taking part, but rejected calls from IMF Managing Director Christine Lagarde for high debt restructuring, says Reuters.

“That way Lagarde can go to the IMF board and say ‘’I’m not violating our rules” and Schaeuble, whose government faces elections next fall, can say’ see, we have the IMF on board ‘’, the agency’s source said.

The exact nature of the IMF’s role has not been decided, but it would have more powers than a simple consultant and would for example be responsible for drawing up certain proposed agreements and negotiating documents, as well as coordinating with both Greece and the EU.

“They won’t put money into the program but it won’t be just technical assistance; they will probably take a special advisory role to be created especially for the Greek bailout,” the second Reuters source said

“Talks this week just made it clear that the IMF just can’t come on board formally.”

“They will remain part of the troika and be at all the talks,” the source added.

According to the same Reuters source a deal on debt relief is still possible, but the “window of opportunity” is now very narrow and depends largely on the quick conclusion of the second review.

If the review is delayed, discussions may be postponed until after the German elections next fall, as any discussion of debt restructuring will annoy the Germans voters, said the same source.

Finally, according to Reuters, Greek and IMF officials who had contacts in Washington discussed this “special status” supported by the Greek side. Despite the change in the IMF’s status, Greek officials believe it will help them to have an institution that supports the debt restructuring at the table.