IMF Departure

Giving Up on Greece

Lagarde-Tsipras2 getty etc
The International Monetary Fund, led by Christine Lagarde, left, abruptly ended talks with Greece on Thursday, as tensions built for the country to leave the euro.
  • Why it matters

    Why it matters

    The IMF is playing hardball with Greece, mounting pressure on the country to agree to a deal to unlock its bailout and avoid insolvency.

  • Facts

    Facts

    • The IMF broke off talks with Greece on Thursday, with its technical team of experts returning to Washington.
    • Greece needs a deal by the next Eurogroup meeting on June 18.
    • The current bailout program expires on June 30, when Greece needs to pay back the IMF €1.6 billion.
  • Audio

    Audio

  • Pdf

Time appears to be running out for Greece to remain in the euro.

The International Monetary Fund on Thursday withdrew its negotiating team from Brussels, saying there were too many outstanding differences with the Greeks, despite months of negotiation.

“The ball is very much in Greece’s court,” said an IMF spokesman, Gerry Rice. “There are major differences between us in most key areas. There has been no progress in narrowing these differences recently.”

Mr. Rice said the barriers to a deal included pensions, taxes and financing. The IMF, the European Union and Greece’s other major lenders are demanding the Greek government cut spending, which Greece, led by the left-wing Syriza party, has so far refused to do.

On Thursday, the IMF decided enough’s enough. The IMF technical team had returned to the United States but remained “fully engaged” with Athens, the spokesman, Mr. Rice said: “The IMF never leaves the table.”

The surprise move by the Washington-based fund seemed to dash hopes that a solution to the Greek debt crisis could be found this week.

Earlier Thursday, E.U. Commissioner Pierre Moscovici said a debt deal was close and needed a “happy ending.”

Yet, it seems many in Europe are now bracing themselves for talks falling apart.

Jens Weidmann, chief of Germany’s Bundesbank, warned: “The risk of insolvency is increasing by the day.”

A report in Bild, Germany’s biggest selling daily tabloid newspaper, cited sources in the Berlin government saying they are making contingency plans for a possible Greek default.

Greece has been at loggerheads with its creditors for months over unlocking its remaining €7.2 billion in bailout funds.

The election of radical leftist government, led by Alexis Tsipras, in January, unsettled relations between Athens and lenders, the IMF, the E.U. and the European Central Bank. Mr. Tsipras and his Syriza party were swept into office on a pledge to end punishing austerity measures and have pushed unsuccessfully so far for lenders to renegotiate Greece’s crippling debt burden.

But Greece’s creditors have insisted that country stick to previous commitments, such as pension cuts and labor reforms, made as part of the two bailouts, worth €240 billion, that it has received since 2010. The Greek government says the conditions are unsustainable.

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