Germany says IMF plans to stay involved in Greece bailout talks

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[January 20, 2017]  BERLIN (Reuters) - The International Monetary Fund's chief has reassured German Finance Minister Wolfgang Schaeuble that the IMF plans to remain constructively engaged in talks about further aid for Greece, a spokesman for Schaeuble said on Friday.

Christine Lagarde spoke with Schaeuble about Greece's bailout program during the World Economic Forum in Davos this week and told him the IMF aimed to continue its participation, the spokesman told a regular government news conference.

The German Finance Ministry this week denied a report in Bild newspaper that Berlin was preparing for a deal without the IMF, which has said it will take part only if it includes significant debt relief.

"Mrs. Lagarde again reassured the finance minister that the IMF is participating constructively in the ongoing discussions and continues to work for a quick agreement on full participation in the rescue program, including funds from the IMF," the spokesman said.

He said it was speculative to discuss what Germany would do if the IMF did pull out.

Germany, Europe’s largest economy, wants the IMF to have a stake in the bailout to give the rescue plan greater credibility, but also opposes granting Athens significant debt relief.

Disputes over labor reforms, fiscal targets and debt relief have prevented Greece and its foreign lenders from concluding a compliance review of its current bailout program, the third since 2010.

Schaeuble last week raised the possibility of a new program for Greece without the IMF should the Fund decide to bow out. Bild said Schaeuble thinks the European Stability Mechanism (ESM), the euro zone's bailout fund, would be tapped to plug the hole left by an IMF departure.

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Christine Lagarde, Managing Director, International Monetary Fund (IMF) attends the annual meeting of the World Economic Forum (WEF) in Davos, Switzerland January 18, 2017. REUTERS/Ruben Sprich

But his spokesman declined to discuss that prospect, citing Lagarde's latest comments about the IMF's commitment to participation in the Greek bailout.

Greece's EU lenders want the country to achieve and maintain a primary surplus - after interest payments - of 3.5 percent of GDP beyond 2018, when its current program ends. The IMF says that unless Athens adopts more austerity measures and legislates them upfront, the surplus will only reach 1.5 percent.

Greek government officials said last week that Prime Minister Alexis Tsipras - who is sagging in polls - would welcome an IMF exit, hoping it might help conclude the review without legislating more austerity now.

(Reporting by Andrea Shalal; Editing by Michelle Martin/Mark Heinrich)

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