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IMF will not activate its program for Greece if no debt relief agreement, says Fund’s spokesman

“The International Monetary Fund will not activate its program if there is no agreement on debt relief for Greece, ” Fund’s spokesman Gerry Rice said during a regular briefing on Thursday.

Rice clarified that the € 1.6 billion program approved by the Fund for Greece will not come into force until there is an agreement to alleviate public debt. The decision would be taken in February, the informal deadline for the IMF to take decisions about Greece.

The spokesman reaffirmed that an IMF agreement with the European partners on debt restructuring is possible in the coming period, as there has been “some progress” in the negotiations, however, he refrained from giving a timetable for the conclusion of the discussions.

Rice said that the IMF sees positively a proposal put forward by the head of the European Stability Mechanism (ESM) Klaus Regling on debt relief for Greece.

According to Rice, the proposal, which foresees repaying Greece’s old loans with the unused money available after the completion of the country’s third bailout program, is not new and has been discussed in the past. 

He said that such a solution could contribute to the sustainability of Greek public debt as the funds granted by the ESM to the country are accompanied by a comparatively low interest rate.

Rice added however that the IMF would need to examine whether this action would be enough to make Greek debt sustainable, noting that debt relief is a necessary precondition to activate the “initial agreement” achieved this summer, he added. 

PS If the IMF will not activate its program, Greece will not need to implement the 1.6billion euro austerity measures that among others include also broadening of the tax-basis for low incomers.

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