IMF: Debt relief – which Greece’s European partners oppose – is necessary

The Economic Counselor and Director of the IMF’s Research Department Maurice Obstfeld has argued that there can be ‘some flexibility’ in Greece’s budget targets, for a short-term, due to the impact of the refugee crisis.

In his interview for German daily Handelsblatt, the IMF director underlines the importance and inevitability of austerity measures and reforms, but also stressed that debt relief – which Greece’s European partners oppose – is just as necessary.

According to Mr.Obstfeld the current trend in Europe is to reject economic integration in favor of national solutions, however he insists that now is the time for greater cooperation between member states.

The raising of fences on European borders is a source of concern for the American economist, since it is in direct opposition to the idea of a currency union such as the euro. As such, the IMF official suggested that Europe must face the humanitarian catastrophe and split the burden of the receiving and integrating refugees.

Finally, Mr. Obstfeld commend that Europe will have to make greater efforts if it is to overcome the economic crisis and suggest the creation of a deposit guarantee scheme, which, however, Germany vehemently rejects