By T. Tsiros
The International Monetary Fund (IMF) and the coalition Greek government will again “cross each other’s path” next month, as the Fund’s one and only review of the ongoing bailout program will come after a closely watched third review by European creditors is concluded.
The IMF review deals with an agreement, in principle, dating to July 2017, which followed a request by Athens for a standby arrangement. The latter foresaw the conditional disbursement of a 1.6-billion-euro loan tranche to Greece, but under the provision that European creditors would take specific measures for debt relief in the near future.
The Fund has long demanded that Greece’s European partners and creditors announce debt relief measures in order to guarantee that the country’s debt load is sustainable.
An agreement at the time prescribed a review by the IMF in mid February 2018, followed by a decision on whether the 1.6-billion-euro tranche will be disbursed by the Fund to Greece after all.
According to most reports at present, the specific credit line will not be activated. Two reasons, generally speaking, point to such a development. Firstly, the Greek appears unwilling to add the loan to its debt load, given that the borrowing costs now correspond to ones from the sale of a new bond issue, something that is expected after a Jan. 22 Eurogroup meeting.
Additionally, Athens judges that any discussion over debt relief measures is unlikely to begin in February, which means the IMF’s standing condition vis-a-vis the Greek program will not be fulfilled.
