Germany stresses need for IMF backing in Greece bailout

14th August 2015, Comments 0 comments

Germany stressed Friday that International Monetary Fund backing for a third Greek bailout deal is "crucial" in order for Berlin to support the agreement.

"IMF involvement is crucial for the government... that has not changed," said Chancellor Angela Merkel's spokeswoman Christiane Wirtz.

The catch is that the IMF has demanded debt relief for Greece -- whose debt is equivalent to 170 percent of gross domestic product -- an idea also backed by the European Central Bank, but which Germany has viewed sceptically.

The IMF, one of Greece's creditors, said Thursday it wants Athens' European partners to decide on a package of debt relief before determining if it will take part in the next bailout.

Germany argues that an outright debt "haircut" would breach EU treaties, but on Friday it reiterated it is open to future talks on debt restructuring.

Debt relief ranges from cutting the outstanding principal amount of a loan to lowering interest rates to extending the repayment period.

A finance ministry official said Friday: "We have repeatedly said that European treaties do not allow a haircut in the classic sense .. on the outstanding nominal debt."

"What has in the past already been agreed, including in 2012, has been restructuring of the debt.

"That is to say that if Greece now implements the measures and reforms envisaged in the MOU (memorandum of understanding), than on that basis we could talk about debt restructuring."

The spokesman said the issue would be among topics discussed when eurozone finance ministers meet in Brussels Friday.

Greek lawmakers early Friday backed a 85-billion-euro ($94.8-billion) rescue plan negotiated with the European Union, ECB and IMF, its third bailout since 2010.

The eurozone ministers were set to issue their verdict on the draft deal reached after weeks of negotiations.

Berlin, Europe's effective paymaster, is insisting on further clarifications of details from Greece before giving the deal the nod.

© 2015 AFP

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