Tuesday, December 30, 2014

IMF Freezes Aid to Athens Until After General Elections


WASHINGTON – The International Monetary Fund announced Monday that it would suspend the disbursement of financial aid to Greece until a new government takes power following next month’s elections.

In a communique, IMF spokesman Gerry Rice said that talks with Greek authorities over the international financial bailout would be resumed as soon as a new government is chosen after parliamentary polls are held in late January or early February.

The announcement came shortly after the sharply divided Greek parliament once again failed to elect a consensus candidate to occupy the largely ceremonial office of the presidency, making the legislative elections originally set for 2016 inevitable.

Reacting to the move in Athens, Finance Minister Gikas Jarduvelis said he did not know if the “troika” of international creditors would still travel to Greece next month as scheduled to assess the results of painful belt-tightening reforms imposed on the country.

These reforms, including a highly unpopular austerity program and social spending cutbacks, were a condition of over 100 billion euros in aid that enabled Greece to narrowly avoid sovereign default.

Representatives of the European Commission, the European Central Bank (ECB), and the International Monetary Fund (IMF) were scheduled to evaluate the reforms which Athens has already been granted an extra month to implement.

“If there would have been a government, the troika would have returned to Athens on Jan. 10, but now there’s no telling what’s going to happen,” Jarduvelis said.

“I think the reforms will be delayed. If afterwards we stay on the ball, we will be able to make up for lost time. But there are difficulties,” the minister added.

If the presidential stalemate had not, as required by the constitution, led to early elections, Jarduvelis said an extension until the end of February of the time period needed to reach reform targets would have been sufficient.

The government, he said, “does not have a liquidity problem” but even if it should run into trouble around the middle of March, it could always issue treasury bonds until matters are resolved.


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