German finance minister Wolfgang Schäuble has ruled out debt relief for Greece, rebuffing a key demand of the International Monetary Fund even as he warned that the current bailout would fall apart without the IMF's participation.
The intervention on the sidelines of the IMF’s spring meetings in Washington highlighted growing tensions between the IMF and its European bailout partners over Greece, now in its sixth year of an economic rescue programme.
It came as the IMF warned again that it would not be able to participate in a Greek bailout without meaningful long-term debt relief. It raised the possibility that it would not contribute financially and adopt only a monitoring role.
Mr Schäuble called the disagreement a distraction from the need for tough reforms and said it was “not necessary”.
“That is indisputable,” he said on Friday. “That is an attempt not to do what irrefutably must be done.”
But he also said it was inconceivable that an €86 billion bailout of Greece negotiated last year could proceed without IMF participation.
Poul Thomsen, head of the IMF's European department, said the continuing negotiations with Greece and European bailout monitors were still focused on fiscal reforms and had not yet moved seriously onto the issue of debt relief.
“These [debt] discussions have hardly started,” Mr Thomsen said in an indication that talks are still likely to drag on for weeks, if not months.
The IMF has paid out little to Greece in recent years. Since 2013, it has made just one disbursement of rescue funds.
Also on the fringes of the IMF /World Bank spring meeting yesterday, Iran called on the United States and European Union to help it access the global financial system, including assets that Tehran says were supposed to be unfrozen following its historic nuclear deal.
"They need to do whatever is needed to honour their commitments," Iranian central bank governor Valiollah Seif said. "Otherwise the JCPOA [Iran nuclear deal] breaks up under its own terms."
– (Copyright The Financial Times Limited 2016/Reuters)