EU institutions have offered modest debt restructuring but are demanding higher levels of repayments for a decade, financed by tax hikes and spending cuts that would be legislated in advance to ensure commitments are met and sustained. The IMF has argued instead for greater debt reduction, a more relaxed fiscal policy to promote growth and for structural changes to improve competitiveness, but also demanded prior legislation. The Greek government insists it will not ‘pre-legislate’ what would be tantamount to a fourth bailout.
Greece must secure its next bailout tranche before July/August when it faces debt redemptions of 7.5 billion euros.
The Europeans want to ensure the Greek debt issue does not roil markets or anger voters during pending Dutch, French and German elections.
They also are pursuing a stepped-up repayment schedule starting next year.
The IMF restructuring proposal would postpone income but have no capital cost for European creditors while cutting Greek interest costs.
