On Monday afternoon, news broke that the IMF looked to be splintering [8] from the rest of the Troika over just what conditions must be met in order for Greece to receive a €7.2 billion tranche of aid the country desperately needs to pay salaries, pensions and, ironically, the IMF. According to FT, Christine Lagarde and company are set to demand that Athens’ European creditors write-off enough of their Greek debt to bring the country’s debt-to-GDP ratio down to a ‘sustainable’ (whatever that means in the Greek context) level over the next several years. Otherwise, the organization argues, disbursing aid to Athens is equivalent to throwing money into a black hole, as the country’s fiscal situation is still in dire need of reform.
Of course much of what Greece owes in May is due to the IMF itself and so, as we remarked yesterday, “Greeks are expected to smile and nod knowingly at this latest hollow IMF threat, in which it is now unclear if Lagarde is the Troika's good cop (demands a debt haircut) or bad cop (refuses to pay Greece any more).”
Today, we get yet another indication that negotiations are now not only complicated by Greece’s unwillingness to cross Syriza’s “red line” campaign promises, but by friction between the country’s creditors who, in an irony of ironies, now appear to be at odds over their own set of "red lines."
More via Bloomberg:
EU, IMF failing to coordinate means compromise in Greek talks not possible, a Greek govt official says in e-mail.
EU, IMF have different red lines: IMF insists on pension system overhaul, labor market deregulation; EU Commission insists on primary deficit: Official
Serious disagreement between EU, IMF creates deadlock in negotiations
This means it's now Greece's turn to blame creditors [9] for the intractability of the negotiations:
"Serious" policy differences between Greece's two major lenders - the European Union and the International Monetary Fund - are preventing the country from reaching a compromise with lenders, a Greek government official said on Tuesday.
"The result is that the institutions have red lines everywhere: pension, labour (IMF), and primary surplus (Commission). Against this background there cannot be a compromise. The responsibility belongs exclusively to the institutions and their weakness in coordinating"...
The Greek official said the IMF was being insistent on pension and labour reforms that Athens opposes, while the European Commission was more leninent. The Europeans, on the other hand, were being strict on the target for a primary budget surplus while the IMF was less worried about that, the official said.
The IMF also wants Greek debt to made viable through a writeoff of debt, while the European Commission is against such debt relief, the official said.
Meanwhile, Tsipras is said to have spoken with both Lagarde and Angela Merkel over the phone even as Germany unleashed the Schaeuble who promptly threw still more cold water [10] on any remaining hope for an imminent breakthrough:
Greece may not be able complete the preparatory work needed for an agreement on financial aid before euro-area finance ministers meet in Brussels next week, German Finance Minister Wolfgang Schaeuble said.
“The Eurogroup will take up these matters only on the basis of the comprehensive report by the institutions,” Schaeuble said at a press conference in Berlin Tuesday, referring to the European Commission, the European Central Bank and the IMF. “I’m rather skeptical that we can get there by Monday, but I’m not ruling it out.”
As a reminder, Monday is D-Day, as Athens must make a €780 million payment to the IMF and unless the IMF agrees to effectively pay itself by loaning Greece more money, that payment will be missed at which point "all bets are off [11]."
And Greek bonds not happy:
[12]
