EU Leaders Withhold Greece’s Aid Payment Again
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Greece’s international lenders failed on Wednesday to secure a deal to give Greece the next tranche of its bailout, paving the way for a default. Greece’s next debt repayment is due in mid-December.
Following nearly 12 hours of talks in Brussels, the Eurogroup said it had made progress on a package of measures to reduce Greek public debt, but needed more time for technical work.
Greece’s international lenders failed on Wednesday to secure a deal to give Greece the next tranche of its bailout, paving the way for a default. Greece’s next debt repayment is due in mid-December.
Following nearly 12 hours of talks in Brussels, the Eurogroup said it had made progress on a package of measures to reduce Greek public debt, but needed more time for technical work.
Specifically, the International Monetary Fund and the European Central Bank failed to reach a consensus over how to restructure Greece’s debt and whether it should be cut to 120 percent of economic output by 2020, the benchmark for “sustainability”.
Disagreements surfaced last week as Christine Lagarde, the IMF chief, rebuffed Jean-Claude Juncker, chair of the eurogroup of finance ministers, when he suggested the target date should be extended from 2020 to 2022.
The IMF’s consent is indispensable to releasing the bailout loans, making the public spat over the long term forecast a big obstacle.
[quote] According to a document prepared for the meeting, Greek debt can fall to below 120 percent of GDP only if eurozone countries accept losses on their loans to Athens, provide additional financing or force private creditors into selling Greek debt at a discount. [/quote]
Without the debt-reduction programme, Greek debt will fall to 144 percent in 2020, 133 percent in 2022 and 111 percent of GDP in 2030, from a current level of about 170 percent.
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Greek Prime Minister Antonis Samaras said the lack of a debt deal between the country’s lenders over a technical solution “did not justify any negligence or delays” that is holding up aid needed for Greece to avoid bankruptcy.
“Greece did what it had committed to do. Our partners, together with the IMF, also have to do what they have taken on to do,” he said.
Juncker said the group would reconvene on Monday, allowing for further technical work on “some elements of this package” and insisted that there are “no major political disagreements.”
He said:
[quote] Greece has delivered. Now it’s up to us to deliver. [/quote]
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