Eurozone governments and the International Monetary Fund (IMF) are making headway in settling a row over how to make Greece's debt manageable, Eurogroup President Jean-Claude Juncker said on Saturday. "I expect us to go the rest of the distance with the IMF," Juncker told Reuters on the sidelines of an event in north-western Germany.
"We are working intensively on a compromise with the IMF on Greece and are making progress," he said, adding it remained to be seen how much the differences had been narrowed by Tuesday's meeting of Eurozone finance ministers and the IMF. The dispute is holding up the release of 31 billion euros ($39.39 billion) in emergency loans needed to keep Greece afloat.
Greece's international lenders agreed on Monday to give Athens two more years to make the cuts demanded of it but the Eurozone and IMF clashed over a longer-term target to shrink the country's debt, reigniting fears of bankruptcy. IMF officials have argued that some writedown of Greek debt for Eurozone governments is necessary to make Greece solvent but Germany, the biggest contributor to the bloc's bailout funds, rejects the idea of taking a loss on its Greek debt holdings, arguing it would be illegal.
Several leading German economists called for a "haircut" for Greece in an article to be published in Welt am Sonntag. "A haircut for Greece is unavoidable," said Clemens Fuest, designated head of the ZEW economic think tank. "The question is no longer whether but The IMF also disagrees with an idea from Eurozone finance ministers to give Greece until 2022, rather than 2020, to lower its debt to gross domestic product ratio to 120 percent. Juncker also took aim at Austria, Germany and the southern German state of Bavaria on Saturday for suggesting that a Greek exit from the Eurozone was looming. "Threats in the Austrian, German or Bavarian language that Greece will soon leave the Eurozone do not do Greece any good," he said in his speech. "We must show solidarity with Greece and watch our words."