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Irish government should back debt relief for Greece

24 May, 2016 - by Matt Carthy MEP

Sinn Féin MEP Matt Carthy has criticised Finance Minister’s Michael Noonan’s statements that Ireland does not support a debt haircut for Greece following the release of a devastating analysis of Greek debt by the IMF.

The Sinn Féin MEP was speaking as the Eurogroup met this evening in Brussels. 

Carthy said: “The IMF Debt Sustainability Analysis released in the lead-up to today’s Eurogroup meeting makes it clear that Greece will never be able to grow its way out of debt. Not only does it find that the Eurogroup’s 3.5% surplus target for the Greek economy in order to access bailout funds is not feasible, it states that even a 1.5% surplus is unlikely without an actual debt write-down. Most disturbingly, it predicts that only in 2040 will unemployment in Greece fall to 12%. 

“News that a deal is likely to be reached this evening in order to provide the next tranche of bailout funds will be welcomed by Greece, which faces a new round of repayments to the ECB and IMF in June and July. The release of these funds have been held up by creditors in recent months on the pretext of a delay in the first review of the implementation of the Third Memorandum, which should have been completed in October.  

"It should not have come to this – another potential default crisis – as Greece has fulfilled all of its substantial requirements under the Third Memorandum. No-one is arguing that it hasn’t. In reality the delay in the release of the funds is based on a dispute between Germany and the IMF over whether debt relief is required and, if so, in what form and to what extent. 

“German Chancellor Angela Merkel promised the German parliament that the bailout loans will be fully repaid with interest, and also that the IMF will re-enter the bailout programme after it suspended its participation a year ago on the grounds that Greece’s debt was unsustainable. Germany is promoting the utter falsehood that Greek debt is sustainable in order to kick the can down to road until after next year’s German federal election.

“Media reports of the working group of the Eurogroup in recent weeks have stated that Michael Noonan refused to back even the ESM’s proposal for modest debt relief measures, following the German line.

Carthy continued: “The IMF does not have clean hands in this dispute either. It too is a creditor and proposes a write-down only of debt owed to others, not of its own loans to Greece, which it is profiting from. As well as a debt write-down, which we support, the IMF is also pushing for new vicious austerity measures and attacks on Greece’s pension system over and above the painful cuts that have already been implemented.

“The Irish government should use its position in the Eurgroup to back a write-down of Greece’s debt now – without imposing further deflationary cuts.” ENDS

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