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Europe Insists IMF Remains in Greece's Bailout Program

tsakalotos_stubb-thumb-largeEuropean finance ministers are in favor of Greek debt easing but insist that the International Monetary Fund should remain in Greece’s bailout program.
Greek Finance Minister Euclid Tsakalotos is in a series of meetings with European counterparts ahead of Thursday’s Eurogroup where the progress of Greece’s reform program will be discussed. Tsakalotos is trying to drum up support for Greek debt easing.
On Monday, the Greek minister met with Finnish Finance Minister Alexander Stubb. The latter gave Tsakalotos credit for the progress of the course of the Greek program and spoke of good cooperation and trust with Greece.
Tsakalotos proposed a gradual withdrawal of the IMF from the Greek program. However, Stubb appeared adamant that the presence of the Fund’s technocrats is absolutely necessary.
Information indicates that Tsakalotos will receive the same answer from Dutch Finance Minister and Eurogroup President Jeroen Dijsselbloem on Tuesday and German Finance Minister Wolfgang Schaeuble on Wednesday. Tsakalotos is scheduled to meet his two peers before Thursday’s meeting of Eurozone finance ministers.
Germany, Greece’s biggest lender, was the country that required the presence of the IMF in Greece’s first bailout memorandum in 2010 and then in all other European rescue programs. The main argument was — and remains — that the Fund is the only international organization with expertise in rescue programs, regardless of the many failures it had in recent years.
The pan-European front to the IMF is based on four reasons:
1. Ireland, Spain, Portugal and Cyprus recently managed to emerge gradually from their own rescue programs with the help of the IMF in planning and execution.
2. The IMF is considered that it guarantees a proper technocratic implementation of European rescue programs. The “politicization” of a program eventually leads to failure. Greece is now in its third bailout program because key reforms such as a pension system overhaul and freeing of the markets were not implemented. The IMF had insisted from the beginning that those reforms should have been implemented.
3. It is considered a political mistake for Europe to have called the IMF to rescue a developed country and give the biggest loan in its history and then suddenly ask the Fund to leave as undesirable.
4. The IMF itself will not withdraw from the oversight of a country to which it has lent money that has not yet been paid back yet.
Nevertheless, European finance ministers have been positive about Greek debt easing, providing Athens would adhere to its obligations by implementing the required reforms.

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