Eurogroup outcome opens path for reducing EU-IMF differences over Greece, Brussels sources say

European Union sources on Tuesday reported general satisfaction with the outcome of Monday’s Eurogroup and the framework agreement that allows the return of the institutions to Athens. In statements to the Athens-Macedonian News Agency (ANA), the sources said the path was now open for reducing the differences between the Europeans and the IMF.

Elaborating, the sources said that the implementation of the new package of reforms will ensure that Greece is in a fiscal position to resume borrowing from the markets when the programme ends in August 2018. This would be true, they added, regardless of whether the optimistic forecasts on the EU side or the pessimistic projections made by the IMF are proved more accurate.

In addition, the sources said, if Greece achieves the primary surplus target of 3.5 pct of GDP, it will have the option to implement growth-enhancing measures, especially in terms of lowering taxation. Brussels sources also offered assurances that, if the new package is implemented, Greece will not need the full 86 billion euros available under the current bailout programme, thus ruling out either its extension or a new programme.

The details of the new package will be negotiated when the institutions return to Athens, they said, including the size of both the austerity measures and the measures designed to counterbalance these. Consequently, Brussels considers that a final agreement will most likely be reached at the Eurogroup in April, opening the way for Greece’s participation in the European Central Bank (ECB) quantitative easing programme.

Regarding the IMF’s participation in the Greek programme, the same sources said that Monday’s agreement represents significant progress, which the Fund has also acknowledged, increasing the chances that it will remain involved. On whether it is technically feasible for Greece to enter into a programme with the IMF whose duration does not exceed the country’s programme with the ESM, the Brussels sources noted that the IMF programme can last as little as one year.