Views & Commentaries

Washington, D.C.
April 12, 2014

INTERVIEWER: Mr. Thomsen, do you share the feeling that something is changing in Greece, mainly after the bond issuance? Do you think that Greece is turning the corner and that all the difficult fiscal and structural measures are behind us?

MR. THOMSEN: I definitely think that the program is starting to show strong results now. I think that this is going to be the first year of a recovery. A modest recovery will get underway. Greece returning to the market is very good news. That was one of the major objectives of the program, to bring Greece back to the market, and so that is another important milestone.

On the policy side, we have seen significant overperformance on the fiscal side. There is a good chance that we see a steady stream of good news and perhaps we will start having a virtual cycle of good news, finally. So, yes, I think Greece is turning the corner. But I also think that many difficult decisions still lie ahead, not least regarding structural reforms.

INTERVIEWER: It seems that we have an almost fully financed program for the 12 months ahead. The question is what comes after that. How can we cover possible future financing needs? Reza Moghadam, Director of the European Department, said that these needs might be quite large. Can we use part of the €11 billion buffer?

MR. THOMSEN: The €11 billion buffer should stay where it is to deal with any contingencies in the financial sector.

INTERVIEWER: But I guess not forever?

MR. THOMSEN: For the foreseeable future. It is true that there is a financing gap. If we look at the remainder of the period covered by the Stand-By Arrangement from the IMF, through early 2016… we are still looking at how big it is. But it is larger than what I would expect could be covered through market borrowing. So I think there is a need to find new money somewhere, yes.

INTERVIEWER: From what resources?

MR. THOMSEN: We will have to talk to our European partners about that.

INTERVIEWER: Regarding the sustainability of the Greek debt, when are you expecting these discussions to start? Do the targets that were set in November 2012 remain the same?

MR. THOMSEN: Yes, the targets remain the same. The framework remains the same. There is a clear agreement to start addressing this issue in 2014 and 2015. That was not discussed in the context of this review, but that will feature dominantly in the context of the next review. So that discussion will get underway soon, and we will have to find an agreement on this when we come back for the next review.

INTERVIEWER: When is that?

MR. THOMSEN: It will be over the summer, into the fall, that that discussion will take place.

INTERVIEWER: Mr. Thomsen, thank you very much.

MR. THOMSEN: It was a pleasure.