Ongoing deadlock between the International Monetary Fund (IMF) and the European Union over Greek debt targets erupted into an unusually public exchange on Monday night as IMF chief Christine Lagarde and Eurogroup President Jean-Claude Juncker sparred at a press conference.
Juncker – Luxembourg’s prime minister – announced that Greece would be given an extra two years to reach its “sustainable” debt target, extending the previously agreed deadline from 2020 to 2022. The Telegraph's Bruno Waterfield and Louise Armitstead report the conversation:
“The target, as far as the time-frame is concerned, has been postponed to 2022”, he declared.
“I’m not joking”, he added.
A visibly agitated Lagarde insisted that the IMF was staunchly committed previous agreements. Waterfield and Armitstead add:
“In our view the appropriate target is 120 per cent by 2020”, Lagarde insisted.
“We clearly have different views”, she said.
Without consensus over the baseline year, no Greek debt relief plan can be drawn up.
With Greece’s skyscraping debt projected to reach as high as 190 per cent of GDP next year, reaching the IMF’s “sustainable” target of 120 per cent is certainly a big ask. As Athens scrambles to meet its bailout requirements, doubts have arisen over whether it can get its books sufficiently in order.
Senior IMF officials previously revealed that – without assistance – Greek debt would only slide to 150 per cent by 2020. European Commision predictions were slightly lower - 140 per cent by 2020.
Meanwhile, a previously agreed target for the Greek government to reach a primary surplus of 4.5 per cent of GDP in 2014 was reportedly extended by two years to 2016 on Monday, in the hope of giving the stricken economy vital room to lift itself out of the deep recessionary quagmire it finds itself in.
According to a preliminary report compiled by the troika – the IMF, the European Central Bank and the European Commission – the two year extension would require a further €32.6bn (£26bn) worth of funding, on top of the €31.5 (£25.2) already pledged. However, German officials have quickly moved to deny any extension of the bailout payments. A German finance official told The Guardian:
€32bn is not being looked at... The programme ends in 2014.
Despite the possible extension, the final decision over when the current aid tranche will be unlocked has yet to be made. At the very earliest, Eurozone finance ministers will meet to hammer out the details of the bailout on November 20, according to a Eurogroup announcement made on Monday. French finance minister Pierre Moscovici told Reuters on Tuesday:
Our objective is to reach an agreement in principle on November 20 so that we can … proceed to the disbursement of funds by the end of this month.
Greece had hoped to receive the funds on Monday, the day after it passed its 2013 austerity budget. The delay has dashed Greek hopes of receiving the funds it so desperately needs to meet €5bn (£4bn) worth of bond repayments due on Friday, which would plunge the country into bankruptcy.
With the bailout funds yet to flow, Athens scrambled to sell €4.06bn (£3.2bn) in one-month and three-month treasury bills on Tuesday morning, well over its initial €3.12 (£2.5) target. Expected funds from further treasury bill auctions will give Greece more than enough funds to stay afloat come Friday.