Germany wants Greece in euro zone, IMF says no special deals

Mon Feb 13, 2017 2:17pm EST
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By Jan Strupczewski and Joseph Nasr

BRUSSELS/BERLIN (Reuters) - Germany on Monday voiced support for Greece to stay in the euro zone and the European Commission dispatched a senior official to Athens to persuade it to take on further reforms to salvage its bailout accord.

International Monetary Fund chief Christine Lagarde, meanwhile, remained firm that as a lender the IMF could not cut any special deals for the crisis-hit country, which has received three bailouts since 2010.

The moves came as the European Commission forecast a large jump in economic growth for Greece of 2.7 percent and 3.1 percent, respectively, this year and next.

Such economic recovery, said Yannis Stournaras, Greece's central bank chief, could be in danger without a swift agreement with international lenders. Down the road "it may be too late", he said.

The future of Greece's multi-billion-euro financial aid program is contingent on Athens concluding a second review of progress in its economic reform obligations.

But months of wrangling over changes to labor and energy markets have been compounded by differences between the IMF and Greece's European lenders over fiscal targets for Greece, struggling to emerge from years of recession.

The IMF is not party to Greece's current bailout, and says it will not partake until it has assurances Greece will be able to extricate itself from a spiral of debt.

"We have been asked to help, but can only help at terms and conditions that are even-handed. In other words, we cannot cut a special sweet deal for a particular country because it is that country," Lagarde, the IMF's managing director, told Reuters in an interview in Dubai.   Continued...

The Greek (L) and European Union flags are seen behind a stop sign in front of the Greek embassy in Vienna, Austria, February 25, 2016.   REUTERS/Leonhard Foeger