Are the IMF proposals good news for Greece?

The IMF has presented a new set of proposals in the dispute over the participation of the International Monetary Fund in a third bailout package for Athens. It is willing to make further concessions to Greece by deferring repayments until 2040 and freezing interest rates. Is this the solution to the Greek debt crisis?

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Il Sole 24 Ore (IT) /

Enough of distrust vis-à-vis Athens

Greece needs help now more than ever, the business daily Il Sole 24 Ore concurs:

“Just as happened a year ago the negotiations on Greek debt are being conducted as the country totters on the brink of collapse. And this now of all times, when Greece is facing an enormous task that is in everyone's interests and for which it needs help: controlling the borders that separate Europe from the autocratic regime in Ankara and an influx of refugees that our society cannot manage or integrate. … Above all the reverence Berlin is showing towards Erdoğan stands in stark contrast to its distrust of Athens. This distrust is taking a toll on the entire debt dispute in which the German government is pitched against the IMF. … The financial situation in Greece urgently needs to be stabilised. Once this has been done they can start thinking about strategic solutions in the Mediterranean.”

Kathimerini (GR) /

IMF should leave troika

The current negotiations won't produce a solution for Greece either, former US executive director of the IMF Meg Lundsager comments in Kathimerini:

“All the parties are now struggling towards a compromise, somewhere between the IMF seeking immediate additional debt relief and Germany insisting debt relief be decided on later. Greece’s Parliament, meanwhile, still needs to deliver more tax hikes, on top of pension cuts approved last week. The most likely outcome to the latest negotiations will be an economic reform package that fails to deliver either sufficient financing and debt relief or substantial structural reform. It would likely leave Greece’s economy mired in recession. Deep European vulnerabilities would remain exposed, signalling the likely high costs of sustaining Europe’s economic viability.To avoid this, the International Monetary Fund might help far more if it let the eurozone countries face up to their responsibilities. They must finally work out their internal sharing of mutual financial support and common economic growth.”

Tages-Anzeiger (CH) /

Debt relief no longer taboo

The prospects for struggling Greece have improved but are just as bad as they were last year, writes the Tages-Anzeiger:

“The prospects have improved because the EU can't afford any more trouble on top of the Brexit referendum and the refugees. And debt relief is no longer taboo. But they are also just as poor as they were before because nothing has changed in the approach as a whole, in the 'as if' policy. We can bet that the debt relief will be so minimal or complex that it doesn't achieve anything. And that none of the problems will be tackled head on: not the banks, and not the mega problem of reconciling a common currency with national re-election interests. They will continue to muddle along and the monster will continue to rear its ugly head. And who knows, perhaps one day it will climb out of the lake.”

Jornal de Negócios (PT) /

Europe must change its course

Writing in Jornal de Negócios Rui Peres Jorge hopes for what he sees as a long overdue change in the EU's economic policy:

“The next days in Greece, and also the assessment of the stability programme set for mid-May, will show whether Europe is really determined to adopt a more sensible and honest course in economic policy. Or whether it will continue to opt for lies, like the so-called 'expansive austerity' [the assumption that austerity measures will lead to growth] in Portugal, which is supposed to continue in 2017. Or will it insist that the best solution for Greece is to continue hoping for an improbable and dangerous budget consolidation - in an economy that has already shrunk by 25 percent in the last few years.”

Spiegel Online (DE) /

Time to reward Greece for reforms

The creditors can't keep foisting reforms on the Greek government against its will, warns economist Marcel Fratzscher in a guest piece for Spiegel Online:

“Instead the creditors should focus on how they can finally give the Greek government 'ownership' of the reforms. Rather than punishing it for the reforms it hasn't implemented, they should reward Athens for successful reforms. This key point is connected to the debt relief that the IMF and also some Europeans are increasingly pushing - against resistance from Germany. … The Europeans should hold out the prospect of debt restructuring for Greece: not a debt haircut but coupling the interest payments to the Greek economy's growth rate. When the country is off course and its economy doesn't grow, it pays less interest. When its economy is growing the creditors are given a limited share in this success.”

Hämeen Sanomat (FI) /

Berlin and Paris were too tight-fisted

Only 9.7 billion of the almost 220 billion euros that Athens has received since the start of the financial crisis actually made it into the Greek budget. The rest has gone to lenders and banks, according to a study put out by the Berlin-based European School of Management and Technology. Hämeen Sanomat is not surprised:

“That was already known in Finland way back in 2011 and 2012, so it's not as if this study has revealed anything new, surprising or revolutionary. The alternative to the bailouts would be bankruptcy for Greece, which would leave the creditors facing huge losses. That would then spark a credit crisis with far-reaching consequences, perhaps even for the global economy. Nevertheless one can ask in retrospect why the big EU countries Germany and France have not done more to save their own banks.”

Naftemporiki (GR) /

No hope of growth

The government's new measures undermine all prospects of growth, writes the conservative business daily Naftemporiki:

“The decision is clear. Everything possible will be done to maintain the model that is destroying the country. How will this be done? Through taxes. Government spending will remain as high as ever without the growth in GDP to compensate for it. … We are facing a wall. The countdown has already started. The only prospect of economic recovery is to increase production. Nowadays, however, neither generous subsidies nor loans can achieve this but only investment that creates jobs. Constant tax hikes and increases in contributions in a country that many companies have already left only prevent the fulfilment of this goal.”

Il Sole 24 Ore (IT) /

High time for a debt haircut

After all the years of stringent austerity it is increasingly clear that only a debt reduction can save Greece, economist Mohamed A. El-Erian writes in a guest contribution to Il Sole 24 Ore:

“Greece and its creditors must agree to a credible debt-reduction program that would support the domestic reforms needed to re-invigorate Greece’s growth engines and place its internal obligations in line with its capabilities. Such an approach, which is already favored by the IMF, would boost Greece’s future growth prospects considerably. If clear economic logic somehow does not provide sufficient motivation for Greece’s European partners to support debt reduction, surely Greece’s frontline role in Europe’s historic refugee crisis does. After eight long years, it is time to give Greece the help it needs, in the form of a proper growth-oriented round of debt reduction.”

Le Point (FR) /

Athens needs a debt haircut

For years the EU and Greece have been wasting valuable time, the weekly news magazine Le Point writes and calls for a quick end to the crisis:

“In view of the chaos it is time for a plan for overcoming the crisis: a quicker return to growth, more efficient tax and pension reforms, debt restructuring, substantially more aid to Athens to help it deal with the influx of refugees. It put a great burden on Greece to admit that its leaving the Eurozone would be more expensive than reforming its clientilist and corrupt state. And it put a great burden on the Eurozone to have put off aid payments for six years before passing several bailout plans for Greece, while avoiding the central problem of debt. It is no longer time for buying time. The hour of decisions has come.”

TVXS (GR) /

Tsipras has no alternative but new elections

Greece's creditors are demanding that Athens introduce new austerity measures amounting to around 5.4 billion euros. The Tsipras government is once again in a dilemma and this time a referendum won't help, the left-wing news website TVXS points out:

“Either the government says yes to its now united and merciless creditors and steers the country straight towards disaster, or it tries to avert this scenario with a referendum or new elections. … A referendum would shift the responsibility for the new measures onto the voters. It would give the government a reprieve, but only a brief one. … If the measures are again rejected in a referendum the government will have to attempt the impossible [to keep both the voters and its creditors happy], with devastating consequences. So the only viable course is for it to call new elections.”

Sega (BG) /

Danger of a Grexit still acute

In view of the unstable political situation in Greece the risk of the country leaving the Eurozone is still acute, writes the daily paper Sega:

“Tsipras is in a fix. He is having to break his election promises on a daily basis and his parliamentary majority threatens to crumble. The opposition Nea Demokratia already has far more public support than Syriza. … Against this political backdrop collapse could be just around the corner, for example if two or three MPs decide to rebel and block necessary reforms or if the IMF pulls out as creditor because of disagreements with the Eurozone and Germany refuses to give Athens any more loans. The danger of a Grexit could soon be on the table once more because many Western politicians hold the view that Greece has had its last chance and if it fails this time it doesn't deserve any more.”

Phileleftheros (CY) /

Athens will remain on the drip for years to come

The only thing that can save Greece now is its geopolitical significance, writes Stephanos Konstantinidis, a professor of politics at the University of Québec, in the daily paper Phileleftheros:

“After the referendum, the expulsion of ex-finance minister Yanis Varoufakis and the approval of the third austerity memorandum the game is lost at the political level. … The troika will ultimately impose its will on Greece. In the end the government is wasting its energy on communication games and can't even do the minimum to build up an effective state through improved governance. … It may be that the country will survive only thanks to its geopolitical significance. But basically this means that Greece will have to be kept on a drip that makes the Greeks suffer and lowers their living standards for many years to come. And the nation's humiliation is reaching its limits.”

La Tribune (FR) /

Greek insolvency would have dramatic consequences

The IMF's plan for Greece has nothing at all to do with the explosive situation in the country or in Europe, Socialist MEP Emmanuel Maurel writes in the liberal business paper La Tribune:

“The IMF apparently wants to wind up Greece as if it were a company that has to be put into insolvency proceedings. What is being overlooked, however, is that in a country of twelve million citizens almost 25 percent of whom live in poverty the political system would not withstand such a destabilisation. That, in turn, could lead to the neo-Nazi Golden Dawn party - which is already strongly represented in the Greek parliament - taking power. What has also been overlooked is Greece's significance for the security of the European Union. Because by allowing its other member states to close their borders with the country, the EU is gradually turning Greece into an enormous refugee camp.”

To Vima Online (GR) /

Tsipras's days as PM are numbered

The transcript of the phone conversation appears to show that the IMF is trying to convince Merkel to waive Greek debts. But Berlin won't be moved by that, the liberal online paper To Vima comments, predicting that Alexis Tsipras will soon be making an exit:

“Berlin has already adopted a clear position: it's as if this leak didn't exist. It also made an official statement that there will be no discussion about the debts. … The permanently closed borders fit in with this scenario: Greece wasn't even able to persuade the other countries that the refugee crisis can only be resolved if the EU states show solidarity with each other. … Tsipras is no longer of any use to the creditors. Now he is supposed to present to parliament the pension reform being drawn up by the creditors rather than Tsipras himself. As soon as that happens Tsipras must be ready to say goodbye.”

Die Welt (DE) /

Berlin must give in to IMF demands

Berlin will have no choice but to go along with a debt haircut for Greece, the conservative daily Die Welt believes:

“The IMF has made one thing clear: there is hardly any chance of the Greeks meeting reform goals so ambitious that they could guarantee the sustainability of the country's debt burden. Such a guarantee, however, is the prerequisite for any further IMF participation in bailouts for Athens. ... What is certainly striking is that the Fund is starting to side with the government in Athens. It's too bad Alexis Tsipras has shown no sign of registering this and continues to reject the organisation. Berlin should take a close look at what is happening in Washington. Its most important ally on matters of reform is now upping the pressure. And because Angela Merkel has made IMF participation a necessary condition she will have to give in - particularly as she can't risk having Greece kicked out of Europe over the refugee crisis. ”