Economics: Eurozone, IMF eye compromise to unblock loans for Greece.

Eurozone finance ministers and the International Monetary Fund are likely to strike a compromise on Greece today, paving the way for new loans for Athens while leaving the contentious debt relief issue for later.

IMF head Christine Lagarde suggested a plan last week under which the Fund would join the Greek bailout now, because Athens is delivering on agreed reforms, but would not disburse any IMF money until Euroland clarifies what debt relief it can offer Greece.

Underlining the IMF’s willingness to strike a deal after months of wrangling between its European chief Poul Thomsen and the Eurozone, Lagarde will attend the ministers’ meeting in Luxembourg. IMF participation in the bailout, even without immediate disbursements, would be enough for the German parliament to back new Eurozone loans to Athens, thus ensuring Greece would get enough cash in July to repay maturing debt and avoid default.

Last Friday, Greece’s parliament approved reforms demanded by the international lenders to conclude a long-stalled review of its bailout progress and qualify for more loans before July.

If the expected compromise is reached, Greece could get between €7.4bn and €8bn from the Eurozone bailout fund ESM to cover next month’s repayments.

Alan McQuaid
Economist