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Euro zone to assure IMF it will keep funding Greece: EU official

The euro zone will assure the International Monetary Fund in coming months that it will continue to bankroll Greece, enabling the IMF to disburse its share of international aid to Athens, a senior European Union official said on Friday.

Progress in Greek reforms, undertaken by Athens in return for international financial aid, will be among the topics for talks among euro zone finance ministers, called the Eurogroup, at a meeting on Monday.

Under IMF rules, the Fund cannot disburse its part of the loans to Greece unless it is financed 12 months ahead. But according to the IMF, Athens is 4.4 billion euros short in 2014 and 6.5 billion short in 2015.

For IMF money to flow to Greece, therefore, the euro zone will have to affirm that Athens will get more money.

"I foresee no problem in any of the euro zone states in signing up to this assurance of continued financing," a senior EU official with close knowledge of the issue said.

"It is not my expectation that there will be a concrete figure to that, but there will be a political assurance it will be forthcoming," the official said.

Greece is not in an urgent need of funds now, the official said. It had a primary budget surplus, so the government can finance its current needs. Extra money will be needed only when Greece must pay back debt, and its next big redemption date is not until mid-May, the official said.

That creates a deadline for when Greece needs to meet all the conditions necessary to get the next tranche of money from the euro zone. In EU jargon, that is called "closing the review" of reform progress.

"We are consulting with colleagues in Washington ... at the closure of the review there will have to be an assurance from the Eurogroup that over the next 12-month period the program remains fully financed," the official said.

Because of the time needed for the formalities of loan disbursement, he said, international inspectors will have to sign off on the Greek progress report well in advance of the mid-May redemption peak.

"It is not in anyone's interest ... to prolong the Greek review," the official said.

The official said there was no discussion yet on a third bailout for Greece, which German Finance Minister Wolfgang Schaeuble said might be necessary if Greece does not regain market access at affordable rates by 2015.

Nor were there any discussions on further debt relief to Athens, the prospect of which was held out by euro zone finance ministers in November 2012 on the condition, now met, that Greece should reach a primary budget surplus, the official said.

[Source: Reuters, Brussels, 24Jan14]

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small logoThis document has been published on 28Jan14 by the Equipo Nizkor and Derechos Human Rights. In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.