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IMF and EU playing games on Greek debt relief - Carthy

12 May, 2016 - by Matt Carthy MEP

Sinn Féin MEP Matt Carthy has warned of dire consequences for the Eurozone if Greece’s main European creditors renege on their commitment to debt relief for the Greek state.

Carthy was speaking from Strasbourg where this week the European Parliament debated the Greek debt crisis in light of Monday’s Eurogroup meeting.

The Sinn Féin MEP said: “It’s déjà vu in Athens this week as Greece’s creditors stall on the question of debt relief while attempting to impose yet another new raft of painful austerity measures on the Greek people.

“The creditors continue to delay the review of Greece’s compliance with the third bailout memorandum, which was due in October. The release of the next tranche of funds is dependent on a successful review, but the July deadline for Greece’s next €3 billion repayment to the European Central Bank (ECB) and International Monetary Fund (IMF) is approaching fast and the country is again facing bankruptcy.

“The situation is absurd - almost all of the €86 billion provided under the third memorandum, when provided, will go straight back out of Greece to repay the ECB and IMF, while Greece’s debt keeps growing.

“The Eurogroup this week stated they would impose a €3 billion bundle of ‘contingent’ extra cuts on Greece if it fails to meet its debt reduction targets, which require primary budget surpluses of 1.75% of GDP in 2017 and 3.5% in 2018 – targets the IMF itself has said are simply not achievable. The Eurogroup also postponed discussions on debt relief, once again, until after the completion of the third programme in 2018.

A Member of the European Parliament ECON Committee, Carthy continued, 

“For almost a year the IMF has voiced the opinion that without a debt write-down by creditors, it will be impossible for Greece to reach these targets, meaning that the IMF could not participate in the bailout programme due to its rules on lending to states with unsustainable debt. The German position ignores this reality, with finance minister Wolfgang Schaüble insisting that Greece does not need a restructuring of its public debt burden, which now stands at €311 billion, 176.9% of GDP.

“But the leaders of the IMF have moved closer to the German and EU position in recent months, agreeing that Greece must reach debt reduction targets that IMF's own economists say are impossible. 

“This followed the release by Wikileaks in March of a transcript of a phone conversation between two leading IMF representatives in which they suggested that the only way to force the Greek government to implement harsher austerity measures was to bring about a ‘credit event’. Well, they’ll get their ‘credit event’ in July when Greece may again face default on repayment.

Carthy continued: “Despite the fact that the Syriza-led government has met all of its commitments under last July’s agreement, the creditors are not satisfied. They are clearly pursuing a strategy aimed at replacing the government with their reliable allies in New Democracy. 

“With the IMF playing these games, the impetus is on the leadership of the EU at the political level to ensure that the commitments made to Greece under last year’s agreement are adhered to and that the creditors cannot change the goalposts halfway through the implementation of the third programme.” ENDS

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