Financial Times – Greek prime minister Alexis Tsipras is pushing for the International Monetary Fund to stay out of the country’s €86bn third bailout, leaving the eurozone to take full responsibility for overseeing economic reforms.
Mr Tsipras said in an interview with the Financial Times he was “puzzled by the unconstructive attitude of the fund on fiscal and financial issues”. He indicated that the IMF should leave his country’s third bailout to the eurozone when it decides whether to stay involved early next year.
“We think that after six years of managing in extraordinary crisis, Europe now has the institutional capacity to deal successfully with intra-European issues.”
Mr Tsipras’s assertion is likely to anger the German government, which has always insisted the IMF stay on board. Berlin values the fund’s technical expertise as much as it doubts the European Commission’s resolve.
Mr Tsipras also risks alienating the IMF, which is a strong advocate of debt relief for Athens while Germany and other eurozone members are strongly against debt writedowns, although he praised the fund’s support on this issue.
Mr Tsipras said his government wanted to implement bailout measures as swiftly as possible with the aim of recovering sovereignty and getting rid of the so-called “troika” of bailout monitors from the commission, IMF and European Central Bank.
“We believe the sooner we get away from the [bailout] programme the better for our country,” he said. “If Greece completes the first [progress] review in January, we’ll be covering more than 70 per cent of fiscal and financial measures in the agreement.”
Mr Tsipras also sounded confident that Greece would lift all remaining capital controls by March and resume borrowing on international capital markets “before the end of 2016”.
The Syriza-led government struck a third rescue deal with creditors in July in an abrupt policy reversal aimed at averting a banking collapse and an involuntary “Grexit” from the euro.
“We’ve been five years in a programme. It’s hard for an EU country to have lost its sovereignty for such a long time. To regain it and to get out from the control of the troika, we have to implement the [bailout] agreement. It’s hard but it’s better than any other choice,” Mr Tsipras said.
A successful recapitalisation last month of Greece’s four biggest banks with participation by private investors has boosted hopes of a return to economic growth in the second half of 2016.
The coalition earned praise from the creditors for winning parliamentary approval for a tough 2016 budget and two separate packages of fiscal and structural reforms. Mr Tsipras acknowledged that a third package due to be approved in January included “one step that is difficult because it contains pension reform”.
Greece is resisting IMF demands for pension cuts, arguing that next year’s target for reducing state pension funds’ deficits can be achieved by restricting early retirement and finding alternative spending cuts.
IMF officials are also sceptical of Greek revenue-raising forecasts for 2016. They are also concerned that this year’s budget projection of zero growth may prove too optimistic given a bigger than expected fall in output in the third quarter.
The IMF has suspended further lending to Greece because of concerns about the sustainability of the country’s huge public debt, which is projected to reach more than 190 per cent of national output in 2016.
With most eurozone members ruling out reductions in the nominal face value of the debt owed to them by Greece, the solution will have to be found in other ways, such as a guarantee of continued low interest rates, delayed repayments, or some combination of the two.
This prospective debt-service burden might, it is thought, discourage potential foreign and domestic investors, because they will be fearful of renewed fiscal difficulties once the debt service burden rises once again.
“Our road map is to complete the first review as soon as possible and then to have a positive decision on necessary debt relief,” the premier said.