Clash with IMF blocks battle against debt
EU finance ministers struggled to achieve progress in the battle against the debt crisis amid a schism with the International Monetary Fund over Greece and divisions over a new bank supervisor.
Intractable problems in the drive to give the European Central Bank powers to oversee commercial banks called into question whether new laws could be agreed by the end of the year.
This initiative is a precondition for the rescue of stricken Irish banks by the European Stability Mechanism.
Although Minister for Finance Michael Noonan said he remained confident the timetable for agreement on the legislation could be met, he had “no particular advances” to report on his campaign for bank debt relief as Ireland was not on the agenda.
At issue yesterday were the arrangements for the ECB to scrutinise the banks of non-euro countries, something which led Sweden and Austria to raise the prospect of treaty change to allow equal treatment for the banks of all countries by the ECB.
With an emergency meeting on Greece next Tuesday, the EU powers and the IMF have but days to resolve tension over the best way to deal with its debt mountain.
Mr Noonan tried to gloss over the battle, saying he hoped it would be settled by Tuesday. In private, however, officials acknowledged serious questions over the funding plan for Greece.
The IMF wants to stick with a 2020 deadline for a “sustainable” debt level of 120 per cent of national output, saying creditor countries should accept losses on loans to Greece.
This is anathema to powerful ministers such as Wolfgang Schäuble of Germany, who would face a backlash if losses were incurred. Although the troika suggests Greece may need an additional €32.6 billion after the deadline to tame its deficit is extended, Mr Schäuble said the programme could be adjusted without additional costs.