Exit from Greek bailout program: IMF meeting and Eurogroup discussions

Author: newsroom  | Published: October 13, 2014

IMF discussions on Sunday and Eurogroup meetings on Monday are focused on plans for a smooth exit from the supervision of Greece’s international creditors

Greek officials met with International Monetary Fund (IMF) Managing Director Christine Lagarde on Sunday. During this meeting, Greek Finance Minister Gikas Hardouvelis argued that the country needs no more further loans from its Washington-based lender hoping it could stop funding before the March 2016 expiration. In fact, Greece hopes to end its rescue program on December 31, when the end to European funding is scheduled.

On her part, Ms. Lagarde commended Greek authorities for their significant improvement in Greece’s fiscal position and encouraged them to implement decisively key structural reforms in line with program commitments. She reiterated the Fund’s commitment to supporting Greece in continuing to achieve program objectives.

xardoyvelis-lagarde-swa

No sooner, was the meeting with IMF officials over, that Mr. Hardouvelis flew from Washington to Luxembourg where he is due to brief his Eurogroup counterparts on his meeting with Ms. Lagarde regarding Greece’s economic future. Decisions won’t be reached at Monday’s Eurogroup, however the discussions will be crucial for the coming Eurogroup meetings in November and December.

These meetings on both sides of the Atlantic are making it clear that Greece’s landing from its bailout programs needs to be strategically planned. Not only does Greece need to convince the EU and IMF that it is ready, but it needs to document its post-bailout strategy for 2015 onwards.

Points being considered:

* Both the EU and IMF agree that Greece needs access to additional funding following its exit from the bailout and loans with concessions may be given though a source at the IMF has said that the IMF doesn’t “negotiate its terms.”
* Mr. Hardouvelis has said that Greece doesn’t intend to ask for more loans and this will be confirmed at Monday’s Eurogroup meeting where he may even reject making use of the next IMF installment of 12.8 billion euros for 2015-2016.
* The European Stability Mechanism (ESM) could be a “key” for Greece’s early exit from the IMF bailout program as it could be used as an open credit line for the country. The ESM would allow Greece to borrow for all of 2015 until the end of 2015 if necessary while also sticking to its reform program.