Two weeks have passed since the Eurogroup decided to kick the can down the road to today. However, they did begin talking about some kind of debt relief in that meeting and the tensions are higher this time.
The IMF has offered a long term program for relieving the debt from the debt-stricken nation from the insurmountable debt, deferring payments to 2040 and spreading them out to 2080.
The Washington based organization wants unconditional and upfront debt relief to Greece and describes it as “critical”. Otherwise, it hints, and not for the first time, that it will not participate in this Third Bailout – 86 billion euro program offering Greece European and IMF money basically used to pay them back for previous loans.
Germany wants the IMF on board. It is needed to not only share the financial risk but also share the political risk. The stamp of approval is necessary for German policymakers. In addition, it is also what Chancellor Merkel and finance minister Schäuble promised parliament last summer.
On the other hand, Germany does not want any debt relief for Greece. The sentiment in Germany is that the hard working Germans helped the lazy Greeks more than enough.
So, Germany wants the IMF and not debt relief and wants Christine Lagarde to come around. Who will climb down the tree?
Needless to say, Greeks continue suffering under more austerity measures, and for nothing. 6 years of programs have resulted in a Great Depression: 25% less GDP and 25% unemployment. And the debt is just growing and growing.
Will policymakers from the IMF, Germany and other European countries break the vicious cycle and provide some hope? Given the past and the near-future Brexit referendum, there is a good chance that instead of deferring Greece’s debt payments, they will defer the decision.
More: IMF tells Europe: Transfer union or big upfront haircut for Greece
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