Following reports that the International Monetary Fund (IMF) will abstain from taking part in Greece’s third bailout program, German media assessed the fragile situation on Friday.
German financial newspaper Handelsblatt noted that Eurozone countries will generally tend to postpone problems for the future and questioned how that might affect the IMF’s decision. The newspaper also argued that while Germany had insisted the IMF be a player since the first bailout package, it is now becoming somewhat of a thorn for the German government.
According to a Financial Times report, the IMF said it would potentially not participate in Greece’s new bailout package, citing the Greek debt‘s lack of sustainability and Greece’s poor track in reform implementation as the main reasons.
Over the last month, the Fund has repeatedly called for a Greek debt haircut, which Germany has repeatedly rejected.
While a debt haircut is not possible from Germany’s perspective, Chancellor Angela Merkel had said earlier in July that other forms of debt relief, such as lower interest rates and longer maturing rates, could be negotiated.
German weekly newspaper Die Zeit noted that this relief is a compromise the German government is willing to make. The newspaper also acknowledged the importance of the IMF’s participation in the bailout program for Germany.
In an article that analyzed the IMF’s decision, German newspaper Frankfurter Allgemeine Zeitung wrote that the IMF is trying through this tactic to pressure Germany and the Eurozone countries to commit to a Greek debt haircut.
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