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German Chancellor Angela Merkel gestures during a cabinet meeting at the Chancellery in Berlin, Germany, March 23, 2016. REUTERS/Fabrizio Bensch

Debt haircut impossible with Greece in the Eurozone, says Merkel

German Chancellor Angela Merkel insisted Tuesday that Berlin wants the International Monetary Fund to remain part of the Greek bailout but ruled out a debt haircut for Greece.

“The German position is that the IMF is taking part in an agreement. We want a quick conclusion to these talks,” Merkel said after meeting with IMF Managing Director Christine Lagarde and other world financial leaders in Berlin Tuesday. But she added that discussions about debt relief cannot begin before Greece complies with the commitments it has made.

“It’s not a demand of the federal government to have no debt haircut but rather in our opinion this is legally not possible in the eurozone,” Merkel said. She added that the negotiations between Greece and the representatives of the country’s quartet of lenders “are on the right track but we are still not where we want to be.”

For her part, Lagarde reiterated her call for debt relief for Greece and her determination to “continue helping Greece” but also noted that Athens must do more.

“We are clearly not where we want to be and particularly where Greece should be in order to be stable, in order to be prosperous, in order to respond to the Greek population’s needs,” she added.

US Vice President Joe Biden, who was also in Berlin, echoed similar sentiments, saying that the IMF must be part of the solution for Greece and reportedly also urged Greek Prime Minister Alexis Tsipras, during a phone conversation, to take tough decisions.

Athens wants the bailout review to be completed by April 22 so as to unfreeze roughly 5 billion euros in bailout funds and open the way for debt relief talks. Greece signed up to a bailout worth up to 86 billion euros in 2015, its third international financial lifeline since 2010, which hauled it back from the brink of leaving the euro zone. So far, it has received 21.4 billion of an initial 26 billion euro tranche.

 

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