Euro zone finance ministers and the International Monetary Fund began their third attempt in as many weeks to release emergency aid for Greece on Monday, with policymakers saying a write-down of Greek debt is off the table for now.
Greek finance minister Yannis Stournaras voiced confidence the ministers would finally reach a deal after Greece had fulfilled its part of the deal by enacting tough austerity measures and economic reforms.
“I’m certain we will find a mutually beneficial solution today,” he said on arrival for what was set to be another marathon meeting.
Greece, where the euro zone's debt crisis erupted in late 2009, is the currency area’s most heavily indebted country, despite a big “haircut” this year on privately-held bonds. Its economy has shrunk by nearly 25% in five years.
EU economic and monetary affairs Olli Rehn said it was vital to disburse the next 31 billion euro tranche of aid “to end the uncertainty that is still hanging over Greece”. He urged all sides to “go the last centimeter because we are so close to an agreement”.
Greece had met international lenders’ conditions and “Now it is delivery time for the Eurogroup and the IMF,” Rehn said. Negotiations have been stalled over how Greece's debt, forecast to peak at almost 190% of gross domestic product next year, can be cut to a more sustainable 120% within 8-10 years.
Without agreement on how to reduce the debt, the IMF has held up payments to Athens because there is no guarantee of when the need for emergency financing will end.
The key question is: Can Greek debt become sustainable without the euro zone writing off some of the loans to Athens?
IMF managing director Christine Lagarde said on arrival that the solution must be “credible for Greece”. The IMF argues that the debt can only be made sustainable if euro zone governments write off some of their loans to Athens, but Germany and its northern European allies have so far rejected any such idea.
Two European Central Bank policymakers, vice-president Vitor Constancio and executive board member Joerg Asmussen, said debt forgiveness was not on the agenda for now.