1029 GMT September 19, 2019
Sapin, speaking at the end of the regular monthly meeting of eurozone finance ministers, said that the spate of elections in Europe in 2017, starting with those in the Netherlands in March, would soon begin to close out the political space for a deal to be reached. It is widely feared that failure to resolve the issue could knock the bailout program off course and destabilize Greece, Financial Times wrote.
At Thursday’s meeting, Euclid Tsakalotos, Greece’s finance minister, reaffirmed his rejection of calls from the IMF for Athens to legislate now for the policy measures it would activate after 2018 if the country’s primary budget surplus fell below agreed targets.
Speaking after the meeting, Tsakalotos said it was “not correct to ask a country to legislate two to three years beforehand what it would do in 2019”.
He added: “It is a commitment that goes well beyond the framework of democracy and the ethical values that inspired Europe.”
The IMF has pushed for the approach as it considers whether to participate financially in the €86 billion Greek bailout program.
The fund has argued that the measures are necessary to counterbalance its concerns that a medium-term 3.5 percent primary surplus target set for Greece is unfeasibly high.
IMF participation is seen as essential to shore up flagging public support for the bailout in the Netherlands and Germany, and Jeroen Dijsselbloem, the eurogroup president, reaffirmed after Thursday’s meeting that ministers’ desire to have the fund on board had not wavered.
“A number of member states are adamant on the IMF’s involvement,” he said.
At the same time, both Pierre Moscovici, the EU’s economy commissioner, and Tsakalotos pointed to Greece’s recent strong economic performance, noting that the country was exceeding its targets under the program, their implication being that the IMF’s skepticism is not justified.
The county’s primary budget surplus, a key measure of government finances that excludes debt repayments, nearly doubled last year.
Tsakalotos’s stance against legislating for future measures found support from Sapin.
“It is legitimate to ask Greece to describe the measures it would take to reach objectives that have been fixed,” he said, but asking the country to legislate “does not seem useful and could be politically negative”.
“I could imagine the reaction in the French parliament” to it being asked to do the same, he said.
There is a “real determination among ministers to solve this quickly”, the French minister said. “We all have an interest in making sure that these elements are stabilized in the weeks to come.”
The wrangling over IMF involvement is intertwined with a policy review of the Greek program, and it threatens to hold up disbursement of tranches of bailout aid.
While the next critical debt repayment deadline for Greece only falls in July, there are concerns that failure to unblock the situation could, within a much sooner timeframe, lead the country to start building up arrears.
A wider concern is that the possibility to solve the question could diminish as national elections approach. There are also fears that Donald Trump’s accession to the US presidency may lead to a shift in US policy at the IMF.
The IMF has already played a ‘very constructive’ role in the Greek program despite not financially participating, Dijsselbloem said. “But, of course, it will be welcome to get it done quickly.”