Klaus Regling: I am confident that the third aid package would be the last for Greece

The head of the EU’s bailout fund voiced confidence Wednesday that Greece would not require a new aid package in 2018 after its current international rescue programme runs out.

“If it makes good use of the next 18 months, I am confident that (the third aid package) would be the last for Greece,” Klaus Regling, head of the European Stability Mechanism, told the German daily Sueddeutsche Zeitung.

“Greece has made progress… I am going on the principle that Greece would fly with its own wings from mid-2018 and would be able to obtain its own funds from the markets,” added Regling.

Greece obtained its third international rescue package worth 86 billion euros in 2015, with the bailout funds paid out in several tranches in exchange for specific reforms.

But with the latest round of bailout reform negotiations in a deadlock, fears have resurfaced that the country could crash out of the eurozone.

In a bid to break the impasse with its EU-IMF creditors, Athens on Monday agreed to discuss new reforms.

It desperately needs to secure the latest tranche of bailout cash to meet seven billion euros ($7.4 billion) of new debt payments in July or risk defaulting on its loans.

Regling’s optimistic assessment came hours before IMF chief Christine Lagarde is due to meet Chancellor Angela Merkel in Berlin over the issue that has divided the two.

The IMF recently has threatened to walk away from the aid package as it believes that Greece is not in a position to repay its debt.

The international institution wants the eurozone to grant Greece significant debt relief, but Germany is deeply opposed.

“It’s true that we have different assessments,” said Regling. “For example, to what extent is Greece’s debt sustainable.”

“But we have no differences when we look at what must be undertaken by Greece in the next 18 months,” the ESM chief added.

The German government itself is divided over the issue.

Germany’s Foreign Minister Sigmar Gabriel, a key member in junior coalition partner the Social Democratic Party, has called on Berlin to stand with Greece to prevent an implosion of the eurozone.

“In my view, a country as big and important as Germany has the duty to do everything to preserve the unity of Europe,” he told the Funke regional newspaper group.

But Finance Minister Wolfgang Schaeuble, a close ally of Merkel, has insisted on an agenda of deep austerity.

Source: AFP