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Greece considering to external pressure and accepting a full role for IMF

By Tajuddin
In BUSINESS
Nov 30th, 2014
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Prime Minister Antonis Samaras of Greece seized on new economic data on Saturday that indicated the country was on track to economic recovery and promised relief to Greeks weary of years of punishing austerity.

Prime Minister Antonis Samaras of Greece seized on new economic data that indicated the country was on track to economic recovery and promised relief to Greeks weary of years of punishing austerity.

Athens ( Agencies + DIPLOMAT.SO) – Greece is considering bowing to external pressure and accepting a full role for the International Monetary Fund in its next aid deal with European Union authorities, according to three officials with direct knowledge of the negotiations.

Keeping the IMF involved would be a blow to Prime Minister Antonis Samaras, who has pushed for Greece to have a clean exit from the 240 billion-euro ($300 billion) bailout and free his country from IMF oversight. Greece is under pressure from its euro-area peers and financial markets to accept further aid — and further monitoring — to ensure a stable transition once its bailout regime concludes at the end of the year.

“I am saying every day that the program is running out, there’s a tight timeframe,” Dutch Finance Minister Jeroen Dijsselbloem, who chairs meetings of euro-area finance ministers, said in an interview in Berlin yesterday. “I get every day signals, some good, some bad,” on whether Greece will present new proposals on the way forward, he said.

Greece agreed to begin discussing a credit line and IMF participation at a Nov. 27 meeting of finance-ministry deputies in Brussels, according to two of the officials, all of whom asked not to be named because the negotiations are private. Heading into the meeting, Greek officials had said they wanted to secure a short-term extension to the current rescue program’s final review, in order to exit the bailout and IMF surveillance as soon as possible.

Credit Line

The shift means Greece and euro-area authorities can consider using the euro area’s firewall to provide an Enhanced Conditions Credit Line, whichDijsselbloem has said is on the table. Guidelines for such a credit line require IMF participation “wherever possible.”

The IMF’s media office didn’t immediately reply to a request for comment after normal business hours. The Greek Finance Ministry declined to comment publicly. The European Commission also had no comment.

Greece must conclude the last review of its existing aid programs as a precondition for sealing a deal on a credit line. With talks deadlocked, Greece is on a very tight deadline to submit concrete proposals to bridge the gap with the troika of the European Commission, the European Central Bank and the IMF.

Brussels Meeting

With uncertainty over its future financing prompting a surge in Greek 10-year bond yields, euro-area finance ministers are due to discuss Greece at their Dec. 8 meeting in Brussels.

All aspects of the proposal on IMF involvement remain subject to negotiations. Euro-area finance ministers would consider a credit line of as much as 11 billion euros, the amount left unused in a bank bailout fund, according to one of the officials.

The IMF’s role also remains unclear. Any IMF money on the table might be provided under a precautionary program, with the expectation that Greece should avoid drawing down the funds, a second official said. Euro-area nations have said they want the IMF to stay involved with monitoring Greece and following up on rescue-program conditions.

As the review continues, an extension could be possible until the end of January to allow negotiations on the current program and next steps to be worked out, one of the officials said. Greece has sought such an extension already.

Germany, the Netherlands and Finland are among countries that require action by national parliaments for the European Stability Mechanism to provide any kind of assistance once the current program expires.

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