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IMF backs down to ECB pressure on Greek banks’ non performing loans

Fund to decide its actions after stress tests

In a surprising turn of events, the usually unyielding International Monetary Fund (IMF) has abandoned its staunch position of demanding a complete overhaul of Greek banks through a detailed Assets Quality Review (AQR). After consorted pressure by the European Central Banks (ECB) head Mario Dragi, Germany and partially Greece, the Fund decided to accept the central banker’s suggestion to carry out stress tests and targeted asset inspection at this stage.

The IMF and ECB nearly came at loggerheads on the issue, but the clash was averted last Tuesday when IMD director Christine Lagarde ordered the Fund’s officials dealing with Greece to temporarily withdraw plans for a complete AQR. Before the decision was made sources tell protothema.gr that a series of heated discussions and consultations took place over the phone between Draghi, Lagarde, Greek PM Tsipras, Finance Minister Tsakalotos, central banker Stournaras and series of other ECB and IMF executives on the matter.

A source told protothema.gr and its Washington correspondent Michalis Ignatiou that the head of the ECB was categorical and in sited that the issue of AQR fell in the purview of its jurisdiction and not the IMF. The IMF will decide whether the strategic decisions for non performing loans was successful or not after the completion of the stress tests. Under the current circumstance , and in the absence of new negative demands from the Fund, the completion of the stress test process is not expected to be over before spring. The inside source told protothema.gr that on the basis of the above “it could be concluded that the IMF does not intend to contribute financially to Greece as its Program is completed in the summer of 2018″.