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Velculescu in Athens, but IMF insists: No funding for 3. bailout without debt relief

Delia Velculescu, the new representative of International Monetary Fund in Greece, arrived in Athens Thursday afternoon with her luggage full of austerity measures: cuts in main and supplementary pensions, cuts in civil servants’ wages, ‘cuts’ in early retirement. Velculescu will start her meetings with Greece’s financial ministry team to whom she will table her proposals. Velculescu is one of the four creditors’ representatives who negotiate with Greece about the 3. bailout program.

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Of course, they do not negotiate in the real meaning of the word. They table their demands and the Greek government accepts them.

While the three creditors (EC, ECB, ESM) are determine to push Greece into a new bailout without debt relief, the IMF seems to follow its own way.

The IMF insists that the Greek debt is unsustainable and hints it cannot offer funding toward a 3. bailout without debt relief. But Germany insists, there cannot be a debt relief but austerity till the last Greek has bled out. Before leaving for her summer vacation, IMF’ chief Christine Lagarde made clear that no deal is possible without deep debt relief, potentially in the form of a write-down of Greece’s liabilities. The IMF cites ‘astronomical levels of debt’ and ‘a poor record of government follow-through on reforms.’

According to documents obtained by Financial Times, IMF determined that Greece failed to meet either of those expectations. A previous IMF paper called Greece’s debt “highly unsustainable.”

In order to receive its third bailout in five years, this time projected at around $94 billion [€84 billion], Greece would need approval from the three institutions that make up the so-called troika: the European Union’s governing body, the European Central Bank and the IMF.

The evaluation, reported by Financial Times on Thursday, throws the Europewide political effort to save financially troubled Greece into doubt. Influential German officials have made clear that no bailout would be possible without IMF participation.

While the IMF will continue to participate in bailout talks currently taking place in Athens, Greece, it will be months before the lender will be able to agree to a new program. IMF bylaws stipulate that the institution cannot make loans when the country receiving them lacks the capacity to make reforms or can’t sustain its debt. (full article International Business Times)

Without a bailout, Greece faces the prospect of having to exit the eurozone.

So Prime Minister Alexis Tsipras was right to say on Wednesday, that Grexit is not off the table yet.

PS I told you already in June that Merkel and Lagarde will tussle and scuffle for Greece…

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21 comments

  1. This is not Merkel versus Lagarde. Lagarde has no problem with the right wing crap from Germany, but she has her instructions from the IMF management board. This is a struggle between Germany and the rest of the world, with the USA leading the r.o.w.

    However, the implication is rather serious. The IMF will not participate unless the Germans give way over debt relief. The probability is that they (read, Schaeuble) will not, and Greece will fall into economic oblivion. The Greek banks will fail, capital controls will resume, and Greece will quit the eurozone in an uncontrolled fashion — that will badly damage the eurozone, the EU, Germany and very badly Greece. I guess the USA could benefit from a collapsed eurozone.

    • René Henri Pasche

      When you read Sputnik and other Russion comments you get the feeling that your pessimistic scenario is exactly what Putin and BRICS want to see. It does not make sense for me, but I do not know Obama’s secret agenda.

      • Giaourti Giaourtaki

        To believe Obama to be “on Greece’s side” is a huge mistake promoted by media to put up fake frontlines, as they all “ignored “the very first meeting after Tsipras got elected and that happened to be with the US-ambassador who put pressure on Greece to “compromise” since day one.
        Yet the US is waiting that all reforms Greece implemented in 2015 – except from the measures against humanitarian crisis – will stop as wanted by Dieselbloom and the other lackeys, the US esp hates the prison-reform leaving disabled Savvas Xiro into house arrest as they can’t forget that some Greek government official told the public after the bomb-attack on the Athens bourses that the economy was close to collapsing if only the damage would have been a bit more “serious”.
        They even don’t answer any

        • René Henri Pasche

          interesting. Can you give some more examples of these “reforms” adopted by the Greek Parlament this year? That the US do not like the Welfare-State and are even afraid of the German “Soziale Marktwirtschaft” is out of question. But the poor Americans (15 pc) are not completely abandonned by the State. If the Greek poor could get what the American poor already have got and are still getting, the humanitarian crisis would be less dramatic. A sparrow in the hand is better than…..

          • Giaourti Giaourtaki

            Reforms on citizenship, healthcare and that it’s not a must any more to throw relatives of criminals into prison

    • Giaourti Giaourtaki

      Nice would be if they could gift Greece some Minutemen to have revenge against Brussel, Paris, Frankfurt and Berlin

  2. This is strong message and not only about debt relief, but also about reforms:

    IMF bylaws stipulate that the institution cannot make loans when the country receiving them lacks the capacity to make reforms or can’t sustain its debt.

    According to documents obtained by Financial Times, IMF determined that Greece failed to meet either of those expectations.


    Anotherwords IMF will not lend more money to Greece with or without debt relief: ‘a poor record of government follow-through on reforms.’

    • The poorest record held by anyone in this pitiful saga is actually held by the IMF, with incompetent forecasting models that clearly were wrong from the start, refusal to engage with the realities of the Greek economy, and their breaking of their own rules from the outset to fund a bankrupt state. The last reason is why they have taken this position now — because the entire world is furious with France and Germany for abusing their earlier control of the IMF (now effectively removed) in order to fund French and German banks, while pretending to “rescue” a bankrupt economy called Greece.

      This is all about international politics and the abuse of institutions — namely, the eurozone and the IMF — by Germany and France. It actually has nothing to do with Greece, except as the victim of their disgusting behaviour and low morals.

      • Again wrong. The reforms record is really poor in Greece.
        On top of that, this action inside IMF was forced by non European and non US people. You can write fairy tales about how furious is whole world about France and Germany, but IMF members are furious about Greeks arrogance. You have already forget Varoufakis? IMF members did not.

        When IMF is mentioning debt relief, it is usually propagandistically described by Greeks as IMF’s forecasting incompetence, but it is first of all an outcome of unsufficient reforms (not) made by Greeks – Greeks incompetence/arrogance.

        • Giaourti Giaourtaki

          Lie! The “wrong multiplier” info came directly from the IMF in 2012 – published on January the 3rd, 2013 – the Greek side ignored it and then played it down just like most media.

          • How important was this detail (even if it is true – probably not) compared to ignorance, arrogance and games played by Greeks ?

          • There seems to be a brain malfunction here. The IMF model of Greece was clearly wrong from the outset, contradicted all known economic models, and is the main reason that the economy collapsed in the way that it did.

            Calling it a detail is just pure stupidity and ignorance. Your other comments against Greeks is in the same class, as well as being racist.

          • Giaourti Giaourtaki

            It’s no detail and you can find it published and explained on the IMF site on said day. You sound just like one of these dudes that proof by screaming around that Greeks don’t pay taxes that they’d never worked any single day in their life as otherwise they would know that employees can’t cheat tax. Everybody who belongs to the working classes knows what it means when the jobless-rate is 2.5 times higher than expected by “experts”

          • Only an ignoramus wouId claim that IMF’s wrong fiscaI muItipIier on top of its iIIegaIIy extending a program to Greece against its own mandate is a “detaiI”. This “detail” tore the IMF apart and Ied to the formation of the AIB, thus breaking IMF’s power.

            But pIease, continue with your pathetic & transparent anti-Greek rants and simpIy BE the ignoramus you insist on personifying.

          • Giaourti Giaourtaki

            It’s ignorance, arrogances and games played on Greece. To paint reality the other way round reminds of the methods of Neo-Nazis who call antifascists (leftwing-)”fascists”, esp as it makes no sense any more as Greece had to kneel down, better keep your kickings until most of the interns of the Euro-group will get published.

    • Giaourti Giaourtaki

      The reform record is held by SYRIZA, in 5 months they’ve implemented more reforms than Maximos Mansion did in 5 years and the best most of them were unwanted by the ratpack

  3. PS : My comment was completely offtopic. Sorry.
    Please dont publish it.
    Thanks for your wonderful page that I visit daily.
    I wish all the best for you and your loved ones in these tough and stressful times.

  4. The Guardian: The ‘iron lady’ set to play central role in next act of Greek bailout drama.
    Romanian economist – wow !
    She is not ugly like Lagarde – it was hard on the eyes.
    All anyone wants is for everyone to be happy.
    SO:
    This is act 2406 scene 1 in the Greek bailout drama.
    Embros –

    • René Henri Pasche

      the US took control of Rumania many years before this country was lucky enough to become a member of the EU (mainly not for economic reasons – as in the case of Greece!) So you can be sure that DV is 100 0/0 Rumanian and 200 0/0 American.

  5. She came muttering
    Ya naithoume
    Ya naithoume
    Under her breath
    In Romanian of course.
    The sent her becaus everyone else up till now is frazzled.
    It is like Mission Impossible or James Bond – “send in special force Delia Velculescu.”