Sunday 26 February 2017

IMF denies pressing Greece to default or restructure debt

Andrew Torchia

Greek Finance Minister George Papaconstantinou said there was absolutely no chance of a restructuring of Greek debt. Photo: Getty Images
Greek Finance Minister George Papaconstantinou said there was absolutely no chance of a restructuring of Greek debt. Photo: Getty Images

THE IMF has denied reports it has been privately pressing Greece to default or restructure its debt.

"As we have said consistently, the IMF supports the Greek government's position of no debt restructuring and its determination to fully service its debt obligations. Any reports claiming otherwise are wrong," an IMF spokeswoman said.

German magazine 'Der Spiegel' reported at the weekend that the IMF had reversed its previous opposition to the idea of a Greek restructuring and believed one was necessary soon.

It wrote that senior IMF officials were recommending this to European governments because Greece's debt mountain was roughly one-and-a-half times its annual economic output.

Early in March, IMF European director Antonio Borges said he was "confident that Greek debt is sustainable", adding that the Greeks had made "quite a bit of progress on their banks" as well.

But since the IMF now believed current measures no longer sufficed, it would like to see interest rates on Greek sovereign debt lowered, maturities extended or the amount of principal Greece had to repay cut, 'Der Spiegel' said.

European governments and the IMF are jointly contributing to and administering Greece's ¿110bn bailout, so a split between them on policy could be damaging to the country's prospects for recovery.

Greek and European officials have long insisted that even discussing a restructuring would be counter-productive by damaging banks across Europe and causing panic in markets.

Greek Finance Minister George Papaconstantinou said there was absolutely no chance of a restructuring of Greek debt.

He added: "People [who talk about a restructuring] fail to understand that the costs would much outweigh the benefits."

'Der Spiegel' reported that the IMF was still not willing to call openly for a Greek restructuring out of fear this could increase market pressure on Portugal. (Reuters)

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