EU source: “The elephant in the room is nothing other than the IMF’s own participation in the Greek programme”

Brussels is closely following talks on the Greek issue taking place on the sidelines of the International Monetary Fund (IMF) meeting in Washington but holds little hope for a quick resolution of outstanding issues, a Community source said on Friday.

“The elephant in the room is nothing other than the IMF’s own participation in the Greek programme,” the source told the Athens-Macedonian News Agency (ANA). Germany’s stance was also at odds with the decision taken at the Eurogroup in May, creating further obstacles, the source said.

“We have an agreement and this says that the IMF leadership is in a position to ask the Fund’s board to approve a new programme with Greece before the end of the year,” the source said. In order for the IMF to decide, however, it had said that there must first be “clarity” on what is to be done about Greek debt.

The Eurogroup’s decision in May had stipulated that a discussion on the debt will begin once the first review is successfully concluded. “We are at that point now,” the source added.

He noted that European Commissioner for Economic and Financial Affairs Pierre Moscovici, who is currently in Washington, will have a meeting with IMF Managing Director Christine Lagarde to discuss these issues. The aim will be to find a compromise, the source said, since the Commission’s role was that of mediator.

Another well-informed source, talking to the ANA, noted that a breakthrough may be achieved if there was a realisation soon that the EU had much more serious issues to worry about, and if both the Eurozone and the IMF backed down. Then the IMF could join the Greek programme in November or December, provided that the second review was concluded promptly.

The source predicted that the speed of reviews will accelerate significantly, pointing out that the current Greek programme was extremely frontloaded, so it was natural for the first review to take a long time.

“Most of the reforms have been carried out. The next reviews will focus on checking their implementation,” the source said.

Regarding the disbursement of the 2.8 billion euro sub-tranche, there was “guarded optimism” in Brussels that this might be approved by the Eurogroup on Monday. The institutions were currently examining the bill on civil aviation issues passed on Thursday and the EuroWorking Group was awaiting their report in order to convene on Monday, before the Eurogroup.

“Everyone involved in the Greek programme is in Washington at this time and is working from there to complete the review,” the source said.