International Monetary Fund European Department head Poul Thomsen argued, during a global IMF conference in Lima, Peru on Friday, that Greece will need debt relief.
“We think that Greek debt… has become highly unsustainable,” Thomsen is quoted by Reuters as saying during a news conference. “We think that Greece cannot deal with its debt without debt relief. Greece cannot deal with debt just through reforms and adjustment.”
Thomsen’s assertions are in line with the IMF’s firmly established position since July. IMF head Christine Lagarde reiterated the necessity of debt relief and reform implementations in Greece, if the fund is to participate in the Greek bailout, which is already in effect.
Earlier on Friday, Eurogroup President Jeroen Dijsselbloem claimed that Eurozone leaders have informally agreed to an annual maximum of 15% Greek GDP servicing costs. Dijsselbloem had further noted that the relief will not be needed until 15 years from today.
“What the exact targets should be, we will have to discuss, but there is no doubt in our mind that if Europe wants to go the route of providing relief by lengthening the grace period and lengthening the repayment period, we are looking at a significant lengthening of the grace period and significant lengthening of the repayment period,” Reuters further quotes Thomsen as saying.
The discussion on the Greek debt relief is set to formally open once the upcoming first review of the new Greek bailout is completed.
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