With the International Monetary Fund (IMF) still unlikely to participate in the Greek programme, the EU institutions are looking for ways to secure the IMF’s seal of approval ahead of the Eurogroup meeting.
According to Olivier Bailly, the head of European Economic and Monetary Affairs Commissioner Pierre Moscovici’s office, the IMF is not going to participate in Greece’s third bailout.
With the IMF now unlikely to activate its financial line for Athens, debt relief measures that will be one of the main topics of discussion by the Eurogroup of Eurozone finance ministers in Luxembourg on June 21.
EU officials say the June 21 meeting will be crucial to seal Athens’ financial future as decisions will need to be made on the use of about €40 billion that remains unspent under the €86 billion Eurozone-funded bailout programme that is set to expire on August 20.
The Eurogroup is considering a buy-out of loans worth over €20 billion from the IMF as well as the Eurozone central banks due over the next decade. They will be swapped for cheaper loans from the European Stability Mechanism. The new loans could amount to up to €11 billion that could later be used to shield it from possible market turmoil in the future.
“The IMF will remain a part of the mission,” said Bailly, who suggested that the maturation period for Greek bonds could be set at between 5 to 10 years, which would be a compromise for both the EU and IMF.
Bailly also noted that Greece would not ask for the activation of a precautionary line of credit. “The Greek government would have to ask for it, but I do not see this becoming a reality,” he said, adding that neither the Greek finance minister nor his counterpart in Berlin, requested a credit line at their most recent meeting with Commission officials.
Greece first returned to market financing with a five-year bond in July of last year and issued a seven-year bond this past February. Providing a precautionary credit line would act as a further buffer for Athens and cover its borrowing needs for the next two years and allow Greece to return to full market financing.