Finance minister Michel Sapin fears time running out for decision on €86bn scheme

FT Jim Brunsden French finance minister warns ‘window of opportunity’ closing for Greek deal

by: Jim Brunsden in Brussels

Michel Sapin, France’s finance minister, warned that the “window of opportunity” for a deal on the next stages of Greece’s bailout programme was closing, as a ministerial meeting in Brussels failed to make headway in resolving a split between Athens and the International Monetary Fund.

Mr Sapin, speaking at the end of the regular monthly meeting of eurozone finance ministers, said that the spate of elections in Europe in 2017, starting with those in the Netherlands in March, would soon begin to close out the political space for a deal to be reached. It is widely feared that failure to resolve the issue could knock the bailout programme off course and destabilise Greece.

At Thursday’s meeting, Euclid Tsakalotos, Greece’s finance minister, reaffirmed his rejection of calls from the IMF for Athens to legislate now for the policy measures it would activate after 2018 if the country’s primary budget surplus fell below agreed targets.

Speaking after the meeting, Mr Tsakalotos said it was “not correct to ask a country to legislate two to three years beforehand what it would do in 2019”. He added: “It is a commitment that goes well beyond the framework of democracy and the ethical values that inspired Europe.” FT Magazine A Greek tragedy: how much can one nation take? Greece’s economic crisis has disappeared from the minds of many in Europe, but inside the country, the pain is only getting worseRead more

The IMF has pushed for the approach as it considers whether to participate financially in the €86bn Greek bailout programme. The fund has argued that the measures are necessary to counterbalance its concerns that a medium-term 3.5 per cent primary surplus target set for Greece is unfeasibly high. IMF participation is seen as essential to shore up flagging public support for the bailout in the Netherlands and Germany, and Jeroen Dijsselbloem, the eurogroup president, reaffirmed after Thursday’s meeting that ministers’ desire to have the fund on board had not wavered. “A number of member states are adamant on the IMF’s involvement,” he said.

At the same time, both Pierre Moscovici, the EU’s economy commissioner, and Mr Tsakalotos pointed to Greece’s recent strong economic performance, noting that the country was exceeding its targets under the programme, their implication being that the IMF’s scepticism is not justified.

The county’s primary budget surplus, a key measure of government finances that excludes debt repayments, nearly doubled last year.

Mr Tsakalotos’s stance against legislating for future measures found support from Mr Sapin. “It is legitimate to ask Greece to describe the measures it would take to reach objectives that have been fixed,” he said, but asking the country to legislate “does not seem useful and could be politically negative”. “I could imagine the reaction in the French parliament” to it being asked to do the same, he said. There is a “real determination among ministers to solve this quickly”, the French minister said. “We all have an interest in making sure that these elements are stabilised in the weeks to come.”

It is legitimate to ask Greece to describe the measures it would take [but legislation] does not seem useful and could be politically negative Michel Sapin, France’s finance minister

The wrangling over IMF involvement is intertwined with a policy review of the Greek programme, and it threatens to hold up disbursement of tranches of bailout aid.

While the next critical debt repayment deadline for Greece only falls in July, there are concerns that failure to unblock the situation could, within a much sooner timeframe, lead the country to start building up arrears.

A wider concern is that the possibility to solve the question could diminish as national elections approach. There are also fears that Donald Trump’s accession to the US presidency may lead to a shift in US policy at the IMF.

The IMF has already played a “very constructive” role in the Greek programme despite not financially participating, Mr Dijsselbloem said. “But, of course, it will be welcome to get it done quickly.”