HomeWorld BusinessEuro zone, IMF fail to strike Greek debt deal

Euro zone, IMF fail to strike Greek debt deal


BRUSSELS — Greece’s international lenders failed for the second week running to agree how to get the country’s debt down to a sustainable level and will have a third go in six days’ time.

Report by Reuters

After nearly 12 hours of talks through the night during which myriad options were discussed, euro zone finance ministers, the International Monetary Fund and the European Central Bank failed to reach a consensus, without which emergency aid cannot be disbursed to Athens.

The IMF has so far refused to give Athens an extra two years to meet its debt target, while European governments led by Germany refuse to write off loans, two options which might make the targets easier to reach.

“We are close to an agreement, but technical verifications have to be undertaken, financial calculations have to be made and it’s really for technical reasons that at this hour of the day it was not possible to do it in a proper way and so we are interrupting the meeting and reconvening next Monday,” Eurogroup chairman Jean-Claude Juncker told reporters.

“There are no major political disagreements,” he said.

Nonetheless, the euro extended its fall against the dollar in response, and German bond futures were higher as investors were expected to rush into the safe haven.

Prime Minister Antonis Samaras said the lack of a debt deal between the country’s lenders over technical reasons did not justify holding up aid needed to avert Greek bankruptcy. Greece’s next big debt repayment is due in mid-December.

“Greece did what it had committed it would do. Our partners, together with the IMF, also have to do what they have taken on to do,” Samaras said in a statement.

“It is not only the future of our country, but also the stability of the entire eurozone that depends on the successful completion of this effort in the following days,” he added. “Any technical difficulties in finding a technical solution do not justify any negligence or delays.”

Athens says it has enacted tough reforms, but needs more time to reach fiscal targets agreed with its lenders because its economy has continued to shrink.

A document prepared for the meeting and seen by Reuters declared that Greece’s debt cannot be cut to 120% of GDP, the level deemed sustainable by the IMF, unless either euro zone member states write off a portion of their loans to Greece or the IMF agrees to extend its deadline by two years to 2022.

The 15-page document, circulated among ministers, set out in black-and-white how far off track Greece is in reducing its debt to the target from a level of around 170% of GDP now.

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