Greece Debt Crisis: EU Lenders, IMF Seek To Resolve Differences Over Austerity Measures

Greece’s international lenders and the International Monetary Fund (IMF) are set to finalize measures that the country must undertake to be eligible for its next financial bailout. The Monday meeting will also assess if Greece has delivered on the reforms it had promised as part of the third bailout agreement in August last year.

The bailout hinges on Monday’s first quarterly review by the IMF, which is yet to formally sign off on the deal. While the European Union (EU) and IMF argue over how much more Athens needs to cut in terms of public spending, a group of lender countries led by Germany have reportedly said they cannot release the bailout funds without the IMF's participation.

"Contacts over the past days have led to a situation where it seems reasonable to assume that the review mission, including the mission heads, might be able to go to Athens in the coming week, to be confirmed tomorrow," one official close to the lenders told Reuters.

Under the terms of the deal struck in August, Greece must adopt reforms that will produce a primary budget surplus of 3.5 percent of economic output by 2018. However, disputes have erupted in the past few weeks over what Athens needs do to achieve the surplus, which is defined as a country’s net of revenues and expenses, without counting debt payments.

According to reports, IMF has said that many of the measures agreed to between Greece and its lenders in August are vague and that the pension reform planned by Tsipras’ leftist government was insufficient. Greece's lenders require it to introduce additional fiscal measures amounting to 2 billion to 2.5 billion euros ($2.2 billion to $2.75 billion) for the 2016-2018 period to complete the evaluation.

If the evaluation results in a positive outcome, the European Central Bank (ECB), the European Stability Mechanism and the European Commission would disperse the next tranche of Greece’s bailout funds, which amount to 5.7 billion euros ($6.27 billion).

Greece’s international creditors — the EU, ECB and IMF — completed a first phase of the review nearly a month ago, but progress reportedly stalled over differences between the lender nations and the IMF over details of the politically difficult pension cuts.

On Sunday, Greek Prime Minister Alexis Tsipras accused the IMF of using “arbitrary” estimates to hold up a reforms review crucial to the country’s economic recovery.

Tsipras, who has also accused the IMF of using "stalling tactics" and having “unrealistic expectations” and “unrevised and erroneous calculations,” sounded confident about the outcome of Monday’s negotiations, Ary News, a local news network, reported.

“For the first time, there is substantial convergence … between the Greek side and European institutions … Greece and the EU now see eye to eye on the pace of reforms, the state of the 2016 budget and fiscal requirements to 2018,” Tsipras reportedly said Sunday.