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IMF Maintains Tough Stance Over Greece’s New Bailout Program

Thomsen IMFJust a few days after the posting of his controversial article on the IMF’s blog, Poul Thomsen, Director of the Fund’s European Department, presented yesterday the state of the Greek bailout program to the organization’s Executive Board, saying that IMF representatives won’t be returning to Athens until the Greek authorities submit the fiscal gap figures for 2015.
According to various sources, Thomsen also informed the Fund’s Executive Board of his position as spelled out in his recent article, which seems to have been written with the backing of the organization’s Managing Director Christine Lagarde.
In his article, titled “Greece: Towards a Workable Program,” Thomsen questioned the agreement reached between Greece and the EU authorities by saying that the numbers don’t work out and that Greece must proceed with deeper cuts in pension benefits, which he estimated to be in the range of 7.5-9.5 billion euros.
He also reiterated the Fund’s position on Greek debt by saying that Greece cannot deal with its debt without debt relief. But without bigger cuts in pension benefits and additional reforms, the size of the debt relief will be much bigger, Thomsen said, implying thereby that this made it harder for European governments to agree on debt relief for Greece.
In his presentation of the Greek problem to the Fund’s Executive Board, Thomsen apparently said that the road ahead is steep as he expects tough bargaining to take place between Greece and its creditors, but noted that the Greek government’s attitude towards the IMF has improved significantly in the last few months.
Even so, there remain fundamental differences between Europe’s approach to the Greek debt drama and the position of the IMF, which is, in a nut shell, socio-economic measures that cause more pain but accompanied with debt relief.

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