Washington Views Greek Debt as Unsustainable; Lew Calls for Restructuring

xreos708U.S. Treasury Secretary Jack Lew called on Greek Finance Minister Euclid Tsakalotos to push through more reforms for Greece’s current bailout review. Lew made these comments while Tsakalotos was in Washington on the sidelines of an International Monetary Fund summit.

Lew wants Greece to especially push through privatizations as these are expected to bring in more revenue. The U.S. secretary had already underlined the need for debt restructuring to make the Greek debt viable, a decision that Greece’s EU creditors/partners have yet to take despite pledges and tough reforms that have shocked Greek society.

The IMF’s European Department head Poul Thomsen told the press on Thursday that he was unconvinced that Greek bailout reforms would produce the fiscal targets set by European creditors.

In Washington, there is an overriding view that the Greek debt is not sustainable. It is believed that there will be no major decisions on Greece until after the German elections.

Lew and Thomsen made their statements ahead of meetings that Tsakalotos had on Saturday with IMF Chief Christine Lagarde. Tsakalotos and Lagarde were in talks regarding the IMF’s intentions in Greece’s third bailout.

Lagarde has already expressed skepticism that Greece will be able to recover without debt relief, however German Finance Minister Wolfgang Schaeuble said that Greece will be able to meet its commitments without any debt restructuring bearing in mind that it doesn’t have to pay interest for more than a decade.

On Monday, the Eurogroup is to assess whether Greece has made adequate reform progress to allow the release of a 2.8-billion-euro tranche in loans.