With Greece slowly clawing its way back to recovery after a near nine-year-long economic crisis, the idea that the government could pay off one of its creditors, the International Monetary Fund in Washington, D.C. isn’t sitting well with Germany or the European Stability Mechanism (ESM).
The IMF put nearly 48 billion euros ($54.33 billion) into two first bailouts of 240 billion euros ($271.64 billion) in 2010 and 2012 as part of the Troika of the European Union-European Central Bank-IMF.
When the agency balked at taking part in the summer of 2015 in a third rescue package, this one for 86 billion euros ($97.34 billion) but was replaced by the ESM after Prime Minister and Radical Left SYRIZA leader sought aid he said he wouldn’t.
The bailouts ended on Aug. 20, 2018 and while there hasn’t been a full market return, the government said it’s on a path to pay back the IMF early although the rest of the loan monies won’t be paid pack until 2060 under a debt relief deal.
With Germany putting up the bulk of the bailouts, the Finance Ministry there wasn’t keen on the IMF getting its money back first, said a report in the financial newspaper Handelsblatt.
“We continue to perceive with serious reservations an early repayment of the IMF,” reads a note by the ministry led by Olaf Scholz which Handelsblatt has seen, with Germany anxious it means the IMF would then take a hands-off approach to making sure reforms are met.
The paper said Tsipras can’t expel the IMF from Greece as he promised because that would require consent from the German Parliament but that paying off the agency means its envoys wouldn’t be around for crisis management of Greece’s economy.
The Bundestag will only give the green light for the early repayment if the future role of the IMF is safeguarded for future assessments of the Greek economy, Handelsblatt pointed out.
The same message came from the spokesman of the European Stability Mechanism (ESM) who told the paper the IMF must continue to monitor Greece’s progress even after the completion of the ESM program last August.
“This is also the role that the IMF will have in the future in Greece,” he told the German newspaper, adding the final say belongs to the Eurozone member-states.