U.S. Treasury Under Secretary Nathan Sheets said on Wednesday that the U.S. support the IMF’s participation in Greece’s bailout program, contingent on substantial debt relief from European partners.
Speaking to the U.S. House Financial Services Committee, Sheets answered to questions regarding the International Monetary Fund‘s involvement in Greece’s bailout program.
The Under Secretary underlined two points. He said the IMF would be involved in the next phase of the Greek bailout financially, only if they believed the reform program ”is a significant one” and they were comfortable with the Greek authorities taking ownership of the program. In addition, the IMF’s participation would be contingent on debt relief from European institutions.
The following is an excerpt from Sheets’ testimony to the U.S. House Financial Services Committee:
Question (abridged): I do want you to clarify the current state of negotiations with Eurogroup and Greece. According to IMF rules, any country whose debt is found to be unsustainable, a so-called red zone country, cannot receive exceptional access assistance unless its debt is restructured to make it sustainable with high probability. There was an article about negotiations stalled between Greece and the international creditors. I want to make sure we’re not setting ourselves up for even the appearance of another Greek bailout when the Greeks aren’t willing to do what’s necessary to right the ship.
Under Secretary Sheets: The status of these negotiations between the Greeks and the European partners and the IMF – this is an issue that we follow very closely on at least a day-to-day basis. I think the fundamental point that I would make is very consistent with the point that you were making, that the IMF has made clear that it will be involved in a Greek program in the sense of providing resources only if they are convinced that the reform program that’s being put forward is a significant one and it’s one where the Greek authorities themselves have significant ownership. So that is a first condition that the IMF has made very clear, that this is a significant reform program. The Greeks have made progress over the last five years but they still have work to do and it’s imperative that –
Question: So can you assure us today that Greece will not have access to that exceptional lending mechanism?
Under Secretary Sheets: Yes, and the second –
Question: That was a ‘yes’ acknowledging the question or a ‘yes’ to the question?
Under Secretary Sheets: I would say to both. The second condition, which bears specifically on what you’re saying, is that the IMF has made clear we’ll only provide resources to the Greeks if the program is accompanied by significant debt relief from Greece’s European partners to ensure that the condition of debt sustainability that you articulated is satisfied. Let me further say that the IMF’s position on requiring a strong program and only joining the program if there is significant debt relief is very much supported by the Treasury.