EU sticks to Greece optimism despite Brexit worries

ATHENS, Greece – The European Union’s top economy official laid out his hope that a debt-relief deal with Greece could be achievable by the end of this year.

Economic Affairs Commissioner Pierre Moscovici also said Monday during a visit to Athens that he hopes the International Monetary Fund will be back fully involved in the bailout program at the same time.

The IMF, which has yet to commit to Greece’s third bailout program, has argued strongly in favour of a big debt relief package for Greece and has suggested that the forecasts underpinning the Greek bailout plan are too rosy.

Though an outright reduction in Greece’s debt — a so-called haircut — has been ruled out by eurozone creditors, the repayment timetable for loans could be extended and interest rates could be reduced.

“I hope that we will be capable of finding a good deal by Christmas, by the end of the year. And that will show that everything — and I mean everything — is fully on track,” Moscovici said.

“It is in the interest of all parties … that the IMF is fully on board. Because it adds credibility and usability and visibility to the program. So what I urge, what I plead, what I advocate is that we enter into this virtuous cycle.”

Following a recession that’s seen Greek economic output shrink by around a quarter, Greece’s debt is set to be more than 180 per cent of GDP this year — far more than any other eurozone country and a level that the IMF considers unmanageable.

Moscovici’s visit comes ahead of another review of Greece’s bailout program in the fall, with Athens preparing to deal with a huge level of non-performing loans and international pressure to slash protective labour rules.

Moscovici, a former French finance minister, met left-wing Prime Minister Alexis Tsipras and Finance Minister Euclid Tsakalotos on his one-day stop in Athens.

The European Commission, he said, had not changed its forecast that Greece would emerge from recession at the end of the year. But Moscovici and Tsakalotos cautioned about the economic impact across Europe of Britain’s vote to leave the EU, so-called Brexit.

“I believe there is some concern following Brexit on the economic conditions which will prevail in the EU and euro area in particular,” the Greek minister said.


Elena Becatoros in Athens contributed.

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