IMF and Germany Disagree on Greek Debt Relief

The International Monetary Fund’s threat to pull out of bailouts for Greece unless European partners grant Athens massive debt relief poses a stark challenge to Germany, the biggest creditor, which insists on IMF involvement in any future rescue.

The global lender has made itself unpopular with both sides in the Greek debt saga by playing its role as a teller of inconvenient truths without excessive diplomacy.

Its latest intervention, saying in essence that Greece will never be able to repay its debt mountain, is bound to sharpen debate when the German parliament meets on Friday to decide whether to authorize negotiations on a third bailout for Greece since 2010 that could cost an extra 85 billion euros.

It sharpens an unadmitted rift between Chancellor Angela Merkel, who wants to hold the euro zone together, and Finance Minister Wolfgang Schaeuble, who thinks Greece needs to leave the currency area, at least temporarily.

Merkel can count on a big majority in favor of opening loan talks with Athens due to her grand coalition’s near monopoly of seats, although she may face an embarrassing revolt among her own conservatives.

via Reuters

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