Greece and its lenders started talks in Athens on reform compliance

Representatives of the EU Commission, the IMF, the ECB and Europe’s permanent rescue fund ESM started talks in Athens on Wednesday to review the implementation of the agreed reform program, Reuters reported. Over the weekend, the Greek parliament passed a major reform bill. A positive review by the representatives of Greece’s lenders is a necessary pre-condition for the launch of talks on debt relief for the country.

cep economist Matthias Kullas believes that a debt cut for Greece should only happen once Greece has implemented the bulk of the reforms agreed with its lenders. “Regarding the burden put on the creditors, it does not make any difference if they grant Greece longer maturities and lower interest rates or a nominal haircut,” Kullas argued. “Empirical research has shown that – at the same level of debt relief – a nominal haircut shows a stronger impact.”