EU and IMF at odds on Greece

Euro zone finance ministers embarked on another effort to tame the Greek debt crisis yesterday amid uncertainty as to whether Europe and the International Monetary Fund could settle on a common plan for the country.

Although well-placed EU sources expected a deal in principle last night to release €31 billion in rescue loans to Athens, the need for parliamentary approval in Germany and other countries meant the final sign-off was unlikely before a meeting on December 3rd.

“I’d be more hopeful than I was last week, but there’s no certainty that matters will conclude. There’s a lot of issues outstanding,” said Minister for Finance Michael Noonan as he arrived in Brussels.

Conflict between Europe and the IMF burst into the open last week when IMF chief Christine Lagarde took issue with a European attempt to extend by two years to 2022 the deadline for Greece to achieve a “sustainable” public debt. Ms Lagarde is pressing euro zone countries to accept losses on their loans to Greece to bridge a €32.6 billion gap if Greece is granted a two-year extension to bring its budget deficit within EU limits.

“I expect the meeting to last quite a while and I know that there’s a gap, with people having different views and it’ll be the normal lengthy European meeting where one proceeds systematically to try and close that gap and get an agreement,” Mr Noonan said.

“There’s no immediate impact on Ireland whether it’s solved tonight or whether it’s solved in some days’ time.”

Interest rate cut

While the euro powers are discussing a reduction in interest rates on their loans to Greece, Mr Noonan said “I haven’t heard anything like that” when asked whether Ireland might benefit from a similar interest rate cut.

Germany and its allies have pushed back against the IMF argument that such interest rate cuts and other mooted measures would not suffice on their own to achieve the sustainability of the Greek debt.

Although Ms Lagarde said the IMF wanted to work constructively to seek a solution, German minister Wolfgang Schäuble indicated that problems remained.