EU officials stifle Greek optimism on Greek debt ahead of May 24 Eurogroup

IMF and EU partners deliberate over approach of Greek debt

The Greek government might have set the bar of expectations high on the inclusion in the May 24 Eurogroup agenda of the issue of a Greek debt relief. EU officials, however, are fast to ground the Greek side, as the most recent statements to Bloomberg news agency by Eurogroup President Jeroen Dijsselbloem proved. ‘We cannot say with certainty that there will be a deal for Greece at the May 24 Eurogroup’, he underlined. On the Greek debt, the Dutch politician pointed out that the country had a long term debt with low interest payments, adding that Greece had made strides regarding the completion of the first review.

Dijsselbloem’s statements comes on the heels of a Wall Street Journal article that the IMF (a partner of the Europeans in the Greek program) has proposed a grace period up to 2040, before the repayment of the Greek loans start. Based on the IMF’s proposals payments will end in 2080 with a fixed 1.5% interest rate.

Meanwhile, a top ranking EU source with knowledge of the talks stated: ‘We have not reached the desired point yet, but we are close to achieving a deal on May 24’. The same source went on to clarify that whatever the outcome on May 24, the final statement would resemble the one issued during the May 9 Eurogroup meeting, a position that reveals no real surprises are expected. ‘The result of the Eurogroup should cover both the IMF and the European institutions’, he added.

The Greek side and its creditors have agreed on the core measures to be implemented, but there is still disagreement between the two regarding the imposition of the automatic public spending cuts to take effect, if the surplus target is derailed. The IMF and its European partners are in intense talks over the Greek debt, with the Fund doubting the Greek program can be successful without a real debt ‘haircut’, something Germany opposes.

The aim of the Eurogroup meeting is to achieve some kind of agreement that would allow the IMF decide its course of action on the Greek program at its next board meeting. The Euroworking Group (EWG), the Eurogroup’s preparatory body, is expected to flesh out the final document the Finance Ministers are expected to discuss on May 24.