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France agrees with the IMF about Greece's impossible debt burden

Jul 15, 2015, 13:57 IST

REUTERS/Alain Jocard

French finance minister Michel Sapin just opened up what could be a political rift between Paris and Berlin.

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"The IMF is saying the same thing as we are," Sapin said on French TV on Wednesday morning according to Reuters, adding: "We cannot help Greece if we maintain the same debt reimbursement burden on the Greek economy."

An International Monetary Fund (IMF) report on Greece's debt burden seen by Reuters says that "the dramatic deterioration in debt sustainability points to the need for debt relief on a scale that would need to go well beyond what has been under consideration to date."

That means debt relief will be necessary for Greece, in one way or another. The bailout deal that Athens has just started signing up to puts that option on the table, but only once Greece has successfully started to implement the painful reform, privatisation and austerity measures agreed.

German finance minister Wolfgang Schaeuble took a particularly tough line during bailout negotiations, arguing that Greece should temporarily leave the eurozone. The German government has also led the charge against outright debt relief (cutting Greece's nominal debts), though it's possible to reduce the burden by giving Athens a longer repayment period and lower interest rates.

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Most other countries, including France, had seemed to take a back seat in the talks - until now.

Sapin's comment might be seen in Berlin as a stepping-up of French involvement in Greece's bailout, meaning a potential division between the bloc's two most powerful nations.

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