In an interview with Austrian newspaper “Salzburger Nachrichten,” Euro Working Group Head Thomas Wieser expressed his positive outlook for Greece in the upcoming June 15 Eurogroup and at the same time didn’t hesitate to label the excessive demands of the IMF as “ridiculous.”
“The IMF called for a radical cut in the Greek debt by the country not paying via amortization until 2060 followed by a new loan until 2100 to pay off all the debts. That’s where all Europeans said: This is ridiculous.”
So far, the end of loan repayments are to be reached by 2059.
The proposal of the European Stability Mechanism (ESM) concerns a 15-year extension of the repayment. Other interventions such as the removal of the increased margin in interest rates, the return of profits from ANFA and SMP are also on the table.
Mr. Wieser, referring to what’s on the table, says that after long negotiations there is a financial program for Athens, which all sides accept. It includes, as always, an analysis of debt sustainability, which European creditors and the IMF approach very differently.
Describing the parameters he noted that “the basic parameters are growth rate and primary surplus over the next 45 years. These are not forecasts but assumptions, and even with very few discrepancies, they lead to huge differences.”
The EWG head is optimistic for an agreement and stated that there is a 95% possibility that agreement will be reached at the June 15 Eurogroup.
He also added that the goal is for “the IMF to approve the program basically, but not to make a payment before we come to a joint analysis of the sustainability of the Greek debt.”
Mr. Wieser also explained that the IMF is participating in the program but not contributing financially at the moment.
Answering to why the deal is so difficult he said the program with Greece “has been running for two years and ends in the summer of 2018,” adding “we are in the second evaluation. Basically, we should be on the eighth … ”
He pointed out that this delay “is an indication of the difficulties that exist without the IMF.”