Greece asks for growth incentives and help to break debt impasse
Greece urged its European lenders to offer incentives that will boost growth and help break an impasse between the euro zone and the International Monetary Fund on the size of relief the country needs to make its debt sustainable.
During a meeting of euro zone finance ministers last month, Greece, its euro zone lenders and the IMF failed to agree on the debt relief measures to be implemented after its current bailout expires in 2018, mainly because of different growth assumptions. They are now aiming for a deal at a June 15 Eurogroup meeting.
Government spokesman Dimitris Tzanakopoulos said growth incentives in the coming years, such as investment packages, could help bridge the differences and help “find the common ground needed for a comprehensive solution sought by all sides”.
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“This is an issue which has engaged the current discussions and it may be the key to reach a deal, in other words to find the common ground among all sides on growth projections,” Tzanakopoulos said during a press briefing.
He said the country’s European lenders put Greece’s average growth rate at 1.3 percent by 2060 and the IMF at 1 percent. Tzanakopoulos was optimistic that an agreement could be reached on June 15 but said discussions may continue until an EU summit on June 22.
Some European countries, including Germany, are worried that concessions could affect the pace of economic reforms in Greece and want any debt relief put off until 2018. The IMF has said it will not participate financially in the country’s latest bailout unless there is clarity on the matter.
Greece passed more pension cuts and tax increases last month that will be implemented after 2018, in an effort to convince the IMF to participate in its current bailout, the third rescue package since 2010, and push for debt relief.
Athens hopes that clarity on debt relief would help Greece qualify for the European Central Bank’s quantitative easing programme, which in turn would allow it to return to bond markets as early as this summer.
Greek debt stands at about 180 percent of its GDP, despite a 2012 haircut. In 2016, its lenders agreed in principle on further debt relief and promised to consider it depending on Greece’s bailout progress.
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