Greece still believes it’s getting its debt deal this month — even without money from the IMF


The Greek government is confident that rules surrounding its debt repayments will be relaxed this month, despite reports that the International Monetary Fund (IMF) is unlikely to unlock more money for Athens.

“The general atmosphere is that there will be an agreement on debt at the June Eurogroup,” a Greek government official, who did not want to be named as discussions are still ongoing, told CNBC Monday morning via telephone.

The Eurogroup, which combines the finance ministers from the 19 euro zone members, said in late April that all the final details on the Greek bailout program — due to end in August — will be decided no later than June 21, when the finance ministers next meet.

However, with little more than two weeks to go, Greece is yet to know what these restructuring measures will look like.

This is a critical issue for the IMF, which has said it will only disburse money to Greece if there are clear changes for Greece’s debt profile. So far, all the money that Greece has received under its third bailout program has come from Europe and it’s still waiting for a slice from the Washington, D.C.-based IMF. The IMF has said that it will not disburse any funds until Europe agrees on specific measures that will make Greek debt more sustainable over the long term. Greece has a debt-to-GDP (gross domestic product) of 180 percent.

Michalis Psalidopoulos, Greece’s representative at the IMF, told the state-run Athens-Macedonian news agency Sunday that it is likely the Fund will only be a technical advisor in the program.

This is because bureaucratic procedures within the IMF require time to approve a financial disbursement, and as the days go by it gets increasingly difficult to do so before the end of the program in August.

The Financial Times also reported Friday that German Chancellor Angela Merkel’s party had dropped its insistence on having the IMF on board. It’s important to recall that back in 2015, the German parliament approved another Greek rescue on the condition that the IMF would be part of the program.

When contacted by CNBC, the IMF said it could not comment on Psalidopoulos’ statements, as he is a representative of the Greek government at the Fund’s board.

The Fund added however that talks on Greek debt relief will continue.

“The importance of the IMF’s involvement was not to do with its proposed funding commitment, which was tiny, but with giving credibility to Greece when it exits the program and returns to the international capital markets,” Joan Hoey, regional director for Europe at the Economist Intelligence Unit, told CNBC via email.

The IMF has prepared 1.6 billion euros ($1.88 billion) to give to Athens, which is a small portion out of the total 86 billion euro program.

“The IMF argues that investors will not be reassured that Greece’s public finances are on a sound footing and that its debt is sustainable without serious debt relief. While it has agreed with Greece’s euro zone creditors that there will be no debt ‘haircut’ (a reduction of debt principal), the IMF wants a more radical extension of maturities and grace periods,” Hoey added.

Eurogroup President Mario Centeno told Reuters over the weekend that the Greek debt deal will be credible to markets.

Nonetheless, Greece does not seem too worried whether or not the IMF will disburse the money. Borrowing costs for IMF loans are higher compared to other euro zone loans and the Eurogroup has repeated its commitment to grant some debt relief to Greece.


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