The Greek government believes that the second review of Greece’s program has concluded in theory but not in practice due to the controversial issue of the participation of the International Monetary Fund (IMF) in the program. No groundbreaking results are expected in the Eurogroup meeting that takes place later today, Thursday.
Creditors have reportedly gave Greece a period of one month in order to take measures that will ensure the return of the IMF in the program and consequently lead to conclusion of the second review.
An EU official allegedly sent the message to Athens on Wednesday that February was the last month where the review could be concluded as in March a long electoral period of a number of member states begin.
At the same time the IMF seems to insist that the Greek debt is not sustainable. This is being confirmed by two reports submitted to the broad of directors of the Fund on Tuesday.
According to mignatiou.com, there are some positive references in the reports, however the general point of view is described as “depressive.”
The first report is based on the review of review of the Greek economy conducted by the head of the IMF mission to Greece Delia Velculescu in September 2016. The second report has been prepared by the IMF’s European program head Poul Thomsen and refers to the sustainability of the Greek debt.
Thomsen’s approach to sustainability have been made clear in his blog post of last December.
The IMF’s approach to the Greek problem is more pension cuts, lower tax-free allowance, more structural reforms and additional measures of more then 4 billion euros when the current program concludes in 2018, should the primary surplus target remains 3.5 percent. These measures should be legislated now.
The two reports are expected to be discussed at a meeting of the IMF board in the first week of next month, on February 6th.
A Greek news website wrote on Wednesday that for the first time a representative of the new Trump administration will participate in the meeting of the board of IMF directors. The representative is expected to present Trump’s position about the role of the IMF and will practically determine the Fund’s participation in the Greek program.
With 17.46% US is the strongest contributor to the IMF.
At the same time, beginning of February a major announcement concerning the financial contributions of the USA in international organizations is expected by the Trump administration.
According to New York Times, President Donald Trump prepares orders aiming at global funding and treaties.
What is clear so far is the the lenders want definitely the participation of the IMF in the Greek program. Greece has repeatedly said it can live without the IMF, however, it seeks a compromise package without to have to legislate now measures to be implemented after 2018.
But the ultimate saying lies in Donald Trump?
For one more time, some whisper the magic word. “Grexit”.
The Greek opposition is taking advantage of the review delays and increase pressure for early elections.