Euro zone to assure IMF it will keep funding Greece: EU official

Fri Jan 24, 2014 11:58am EST
 
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BRUSSELS (Reuters) - The euro zone will assure the International Monetary Fund in coming months that it will continue to bankroll Greece, enabling the IMF to disburse its share of international aid to Athens, a senior European Union official said on Friday.

Progress in Greek reforms, undertaken by Athens in return for international financial aid, will be among the topics for talks among euro zone finance ministers, called the Eurogroup, at a meeting on Monday.

Under IMF rules, the Fund cannot disburse its part of the loans to Greece unless it is financed 12 months ahead. But according to the IMF, Athens is 4.4 billion euros short in 2014 and 6.5 billion short in 2015.

For IMF money to flow to Greece, therefore, the euro zone will have to affirm that Athens will get more money.

"I foresee no problem in any of the euro zone states in signing up to this assurance of continued financing," a senior EU official with close knowledge of the issue said.

"It is not my expectation that there will be a concrete figure to that, but there will be a political assurance it will be forthcoming," the official said.

Greece is not in an urgent need of funds now, the official said. It had a primary budget surplus, so the government can finance its current needs. Extra money will be needed only when Greece must pay back debt, and its next big redemption date is not until mid-May, the official said.

That creates a deadline for when Greece needs to meet all the conditions necessary to get the next tranche of money from the euro zone. In EU jargon, that is called "closing the review" of reform progress.

"We are consulting with colleagues in Washington ... at the closure of the review there will have to be an assurance from the Eurogroup that over the next 12-month period the program remains fully financed," the official said.   Continued...

 
A statue depicting European unity is seen outside the European Parliament in Brussels September 5, 2013. REUTERS/Francois Lenoir