Monday 21 May 2018

Greek eurozone membership is not viable, warns IMF in debt showdown

Greek Finance Minister Yanis Varoufakis
Greek Finance Minister Yanis Varoufakis

Mehreen Khan

Officials at the International Monetary Fund (IMF) have voiced doubts about the viability of Greece's membership of the eurozone as Athens has repeated its threat to default on its obligations.

According to reports in Greek media, Poul Thomsen, the IMF's Europe director, told his executive board that negotiations were "not working" and he could not envisage a successful conclusion to the country's current bailout.

The concerns come as voices in Athens have repeated threats to stop paying back their international creditors if no new bailout cash is released.

A Greek official was quoted in the 'Financial Times' saying: "We have come to the end of the road...If the Europeans won't release bailout cash, there is no alternative (to a default)."

Another official who was part of the IMF delegation that met with Greece's finance minister earlier this month, also issued a warning about Greece's weak economic performance.

Greece avoided defaulting to the IMF last week, successfully paying back a €450m loan. However, the cash-strapped government faces another €200m payment on May 1 and another for €745m 11 days later.

Athens' Leftist government has also been forced to deny claims it was willing to hold a snap election to boost its ruling majority.

Greece's outspoken defence minister Panos Kammenos, who heads up the right-wing Independent Greeks party in coalition with Syriza, said the government had a mandate to rule.

"Even if elections take place, we will double our share of the vote," he told Greek TV.

He added the government would not sign another austerity-dictating Memorandum should the current bailout be completed in June.

Following its Easter bank holiday, Athens has now been given a provisional April 20 deadline to polish up a list of economic reforms it will need to implement before it can secure an injection of rescue cash.


Robert Kuenzel of Daiwa Capital markets said: "With the current reform list being based on largely untenable growth and revenue assumptions, Greece has only days to make a huge leap towards meeting official creditors' expectations."

The IMF convenes for its Spring meeting in Washington this week. Greek finance minister Yanis Varoufakis is due to meet US President Barack Obama tomorrow, according to reports.

Mr Obama has previously indicated his support for the Leftist government.

"You cannot keep on squeezing countries that are in the midst of depression," Mr Obama said in February. (©Daily Telegraph London)

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