IMF to shut down Athens office after a decade

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Louisa Gouliamaki/AFP via Getty Images

Greek PM says country is ready to move on from the financial crisis.

ATHENS — The International Monetary Fund will soon be shutting down its local bureau in Athens in a move signaling Greece’s readiness to leave behind a decade marked by financial crisis.

Greek Prime Minister Kyriakos Mitsotakis announced the decision on Tuesday after meeting with IMF Managing Director Kristalina Georgieva at the fund’s headquarters in Washington.

“We look forward to a whole new chapter in our relationship, a relationship of positive cooperation,” Mitsotakis said. Stating he welcomed the decision to close the IMF office in Athens in the coming months, Mitsotakis said Greece would “continue to cooperate, but as a country that has come out of this strict IMF surveillance framework.”

Athens completed its third bailout program in August 2018 after receiving some €290 billion in emergency loans over eight years from the eurozone and the IMF — the biggest bailout for a debtor in recent history.

Mitsotakis now hopes to persuade Greece’s European lenders to relax budget surplus targets set during the 2015 bailout, on the basis that he promises to deliver higher economic growth from 2021 onward. Mitsotakis said he hopes the fund will support Greece’s request.

“The relationship with the IMF has not always been easy, but I think we agree on some important issues, such as the need to reduce primary surpluses in 2021,” he said. “I believe the time has come for this discussion with our partners in the eurozone. We are a credible government, we are implementing reforms, we are in a low-interest-rate environment, our borrowing costs are lower than in Italy.”

Speaking at Washington-based think tank the Atlantic Council earlier on Tuesday, Mitsotakis suggested the extra fiscal wiggle room would help Greece revamp its international profile after years of focusing on the economic crisis.

“For 10 years, we were too focused on our internal problems. It is about time to return to the region with a forward-looking agenda and to punch above our weight,” he said.

The IMF began operating a bureau in Athens in 2010 when it was invited to take part in Greece’s bailout program. Germany was the main driver behind the push to get the fund involved, insisting the EU didn’t alone have the tools to deal with a financially wayward member.

France and other European countries, as well as the European Central Bank, had initially resisted bringing in the IMF as they considered it would weaken the currency union. But since German public opinion fiercely opposed bailing out Greece, Berlin wanted the bailouts to combine direct loans from eurozone countries and the IMF. German Chancellor Angela Merkel hoped the IMF would offer the program more credibility since the European Commission was often criticized as being too lenient toward Greece.

The IMF and eurozone countries, led by Germany, have argued over the years about how much debt relief Greece should get in the long term. The Washington-based fund had pushed for much longer repayment delays, but eventually bowed to Europe.

The fund hasn’t lent Greece money since 2014 because of its mounting debts, while in 2015 Greece became the first developed country to miss a payment and default on an IMF loan.

Critics have also questioned the IMF’s credibility since its participation in the Greek program led it to resort to unorthodox tactics, changing its lending rules.

Last November, Greece repaid earlier than planned some €2.7 billion in IMF loans, which are more expensive than the debts owed to EU institutions, allowing Athens to reduce its debt-servicing cost. According to Greek officials, Athens aims to pay back more loans to the fund ahead of schedule this year once gaining approval from creditors.

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