IMF fears Greece “disaster” in leaked meeting transcript

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Wikileaks has published an meeting transcript from the International Monetary Fund (IMF) between two top officials over the state of Greece, causing the Greek government to demand an explanation.

The transcript of an exchange between Poul Thomsen, the head of the IMF’s European Department, and Delia Velkouleskou, the IMF Mission Chief for Greece, suggests that organisation wants to consider debt relief for Greece.

The document shows frustration with their European counterparts in the Troika – the European Commission, and the European Central Bank. Velkouleskou states “We have said this time and again, we know that they don’t do what we say”, and raises fears that the Greek press “is full of accusations against us”.

But they warn that Europe would be “paralyzed” in the first half of 2016 due to the ongoing uncertainty of the UK withdrawing from the European Union.

Thomsen goes on to say he wants to offer Angela Merkel a choice: accept some form of debt relief for Greece, or continue with the economic reforms without IMF involvement.

Merkel has generally been supportive of International Monetary Fund involvement in the Greek debt crisis.

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“Look you, Mrs. Merkel, you face a question, you have to think about what is more costly: to go ahead without the IMF, would the Bundestag say ‘The IMF is not on board?’ or to pick the debt relief that we think that Greece needs in order to keep us on board? Right?” Thomsen said in the memo. Velkouleskou replied that she hoped the issue would be raised sooner rather than later, expressing surprise that it had not given the backdrop of the refugee crisis.

IMF chief Christine Lagarde weighs in

Head of the organisation Christine Lagarde wrote a letter in response to the leak, as Greece has expressed concerns that the IMF is dragging out debt negotiations until the country is nearly out of funds. “I have on many occasions stressed that we can only support a program that is credible and based on realistic assumptions, and that delivers on its objective of setting Greece on a path of robust growth while gradually restoring debt sustainability”, wrote Lagarde.

She then added “Of course, any speculation that IMF staff would consider using a credit event as a negotiating tactic is simply nonsense”, in an attempt to brush off the leaked documents.

“Finally, the IMF conducts its negotiations in good faith, not by way of threats, and we do not communicate through leaks.”

In 2015, Greece had a government debt that was 179% of GDP.

Image credit: World Bank Photo Collection/Twitter