German Finance Minister Wolfgang Schaeuble reiterated that Greece’s current bailout program will not be valid without the participation of the International Monetary Fund.
In a Wall Street Journal interview published on Monday, Schaeuble repeated a statement he made last week that a potential withdrawal of the IMF could mean that the Greek bailout program needs to be renegotiated. More specifically he had said that a new program would have to get German Parliament approval, a procedure that would take a long time to the detriment of Greece.
“Should it not come to a successful second review [of the measures Greece must implement under the aid program], and should the IMF draw the consequences from this, then the current program would be obsolete. The program was agreed to only on the expectation that the IMF would participate,” Schaeuble told WSJ.
“If it became obsolete, then we would have a situation in which one would need to come up with something new. I wouldn’t recommend this to the Greek government,” Schaeuble added. “But I would be completely relaxed. The German Bundestag would first need to discuss and agree on whether or not it approves negotiating a new program.”
Negotiations between Greece and creditors on the second review have stalled since early December. There are disagreements on crucial issues such as labor reforms, privatizations and the tax-free threshold. At the same time, there are disagreements between the IMF and European institutions over primary surplus targets and debt relief for Greece. The U.S. Fund believes that debt easing should be more generous and the 3.5% of GDP primary surplus target should be lower.
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