December 5 EuroGroup not expected to bring total agreement

IMF will not take part in Monday’s meeting

The Director of the International Monetary Fund (IMF), Christine Lagarde is not expected to take part in the December 5 EuroGroup meeting, according to an EU source, which portends an overall agreement on the Greek issue is not imminent. The same source said the IMF would discuss whether it would be part of the Greek program in a board meeting, after a deal on the requirements included in the second review of the Greek program had been been agreed upon by their European partners which would include the Fund’s considerations. The prospect of Monday’s EuroGroup meeting adopting a “mild agreement” is becoming less likely, as the European creditors of Greece want the IMF to be fully on board the Greek program. The Greek side’s strategy to consistently push for the presence of the IMF on the program, as part of a plan to pit it against the Europeans on the debt relief matter, might backfire if the Fund finds common grounds with Berlin and demands the implementation of harsher measures. Even though the staff level agreement drawn up does contain a series of tough measures, some mutual concessions surfaced, as Greece seems to have “traded” mass layoffs for collective bargaining on the labour reform talks. However, the Greek government will have lost one of its bargaining chips when later talks focus on the open matters of the debt relief and the GDP surplus targets. The Greek government could be forced to make great concessions on the main pensions and the tax deductible threshold, apart form all the tough demands included in the second review package. Meanwhile, the measures proposed by the European Stability Mechanism (ESM) for the Greek debt, which are estimated to cut the debt by 20 percentage points until 2060, through the extension of loan maturity and freezing of interest rates will be on the table of Monday’s EuroGroup meeting.