Greek lawmakers are under pressure from the International Monetary Fund to overcome the current impasse in negotiations, a Greek minister told CNBC on Friday.
There’s pressure from the IMF, certainly,” George Katrougalos, the Greek alternative foreign minister for EU affairs, told CNBC over the phone on Friday.
Katrougalos told CNBC that at the moment most of the pressure comes from the International Monetary Fund (IMF) and not from the European creditors. This could be the case because the IMF is itself under pressure to decide on whether or not it will be part of the Greek bailout program. The IMF wasn’t immediately available for comment when contacted by CNBC.
Greece is currently on a third bailout program worth 86 billion euros ($92 billion). The current impasse between Greece, the EU and the IMF sent the country’s two-year bond yields rising to around 10.09 percent on Thursday, their highest level since June last year.
The institution led by Christine Lagarde has decided not to join the third financial rescue for Greece until there’s evidence that Greek debt will be made sustainable. The latest bailout program, which began in 2015, has a year-and-a-half still to go.
For some countries, such as Germany, the Netherlands and Finland, the IMF’s participation in the program is essential.
“It’s not so much about the funds, the Europeans have enough money to lend to Greece,” an official close to the bailout talks, who asked to remain anonymous due to the sensitivity of negotiations, told CNBC earlier this week, adding that the issue is more of credibility.
According to Katrougalos, the IMF is currently questioning both the Greek and the European fiscal estimates and wants to revisit questions that have already been fixed, including reforms on pensions.
“It’s necessary to have some debt relief,” Katrougalos said, “because we want to enter the QE (quantitative easing) of (ECB President Mario) Draghi.”
Being eligible to be part of the European Central Bank’s QE program would “help the momentum that we have,” the minister said, referring to the recent data showing that Greece returned to economic growth in 2016. At the moment, the ECB cannot purchase Greek bonds because they do not have an investment grade rating.
According to the latest IMF report, Greece should grow 2.7 percent in 2017, after growing 0.4 percent last year.
Katrougalos told CNBC that “there are ongoing efforts to reach a deal next week.” If indeed European creditors recognize next week that Greece has completed all the agreed measures for the second bailout review, then this would pave the way for new disbursements.
With fresh funds, Greece should be in a condition to meet deadline payments next summer and avoid a financial collapse. However, the Greek debt issue and the IMF’s participation are yet to be solved.