German Chancellor Angela Merkel said that a so-called 'debt haircut' for Greece was not possible so long the country remains in the euro zone. She also added that Germany wanted a quick conclusion of a bailout review. The comments came after Merkel met with IMF chief Christine Lagarde. The IMF has been reluctant to participate in the bailout without a firm promise from the EU on debt relief for Greece. Germany, while keen for the IMF to take part, has said relief cannot be discussed until Athens has demonstrated compliance with the terms of the bailout.
"It is not a demand of the federal government to have no debt haircut but rather in our opinion this is legally not possible in the euro zone. But through our statements in the last year, we have also opened opportunities. Now we must first try to implement the programme and call for the programme to be complied with. The Greek government keeps emphasizing they are ready, and now with that, the talks must continue and be led through the necessary measures. I believe we're on a very reasonable way, but we're unfortunately not yet on target," Merkel said.
"We are clearly not where we want to be and particularly where Greece should be in order to be stable, in order to be prosperous, in order to respond to the Greek population needs. Because those are clearly the objectives. And I am really delighted to hear that the authorities in Greece are concerned about the willingness of private investors to invest in Greece. Because that underlines precisely what is needed, which is long-term sustainability and debt sustainability for Greece is going to matter for private sector investors. We are determined to continue to help. But we have said all along, it has to be significantly reformed so it is solid, it has to be significantly strengthened so it is sustainable," Lagarde said.
On Sunday, Lagarde denied that IMF staff would push Greece closer to default.... after the leak of a transcript in which IMF officials apparently didn't make much of a move to secure a deal. Lagarde said that what was needed in Greece was "long-term sustainability", and that debt sustainability for Greece is important for private sector investors. Greece hopes a successful review could unlock an estimated 5 billion euros. It signed up to a bailout worth a maximum 86 billion euros in 2015. So far, it has received less than a third of that amount. Athens hopes a successful review could unlock an estimated 5 billion euros of the remaining of its initial tranche.
