The squabble between the IMF and the EU concerning the fate of the Greek debt is ongoing, with each side aiming to anticipate the movements of the other. On any given opportunity, they change their estimations concerning the achievement of a primary surplus in Greece in 2013, something which is the axis argument of each side.
After the barrage of reports from Washington, with which the IMF attempted to eliminate the surplus, present the fiscal gap and to open the path for the Greek debt haircut. It was the EU’s heads up to launch a “torpedo” on American soil, with a joint article by five top European officials, hosted by Wall Street Journal. The article was written by the President of the Eurogroup Jeroen Dijsselbloem; the European Commission’s vice president Olli Rehn; the ECB Executive Board member Jörg Asmussen; the head of the European Support Mechanism (ESM) Klaus Regklingk, and the President of the European Investment Bank Werner Hoyer.
Their goal with this article, is to stress that the tough austerity policy in Europe is efficient, by presenting the example of Greece and supporting that this is how the economic crises should be treated from now on. More specifically:
-They confirm that the Greek government is likely to achieve primary surplus this year.
-They invoke the measures for the reduction of bureaucracy and for the opening of closed markets connecting these measures with the prospective of recovery, the improvement of competitiveness, and the turn of the Greek economy to the export sector.
In a nutshell, they open the path for any loan facilities that they would provide to Greece in April, as a reward for its debt relief.
However, the IMF chief Mrs Christine Lagarde, stated the following:
-She was in favor of giving more time to Greece in order to achieve the goals of the program, with fewer austerity “doses”, compared to the European demands. In this way the economy would be enabled to “breath”. She requested a direct debt haircut, and not a gradual relief, in order for the goals to be achieved without having an unsustainable debt.
-She said that she has no doubt that the Europeans will fulfill their commitments to assist Greece, in order to elicit their commitment for the final “battle” in April, aiming for the haircut or the debt relief to lead into a sustainable level.
-She questioned the optimistic forecasts for 2014, saying that “we are unable to know what the revenues of privatizations will be.” She also opened the issue of the fiscal gap, saying, however, that no horizontal measures will be needed and that “if there will be a gap, we will sit with our Greek partners to discuss it”.
For now, it seems that the “grand bargain” has just started and it will continue for at least six more months, until the next review in March, as will the issue of the Greek debt relief officially in April.
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