Germany talks down "Grexit" threat

EU and IMF have apparently reached a "common position" on Greece's current predicament...

Germany talks down "Grexit" threat

Petros Giannakouris / AP

The institutions calling the shots on Greece's bailout have finally reached a "common position" on how to handle the EU's worst economy, according to Germany's finance minister.

Wolfgang Schäuble moved again today to allay fears that a "Grexit" would come to pass and suggested that the EU and the International Monetary Fund are now in harmony on the issue.

Speaking ahead of a meeting of eurozone finance ministers in Brussels, he said:

"I believe the institutions have a common position and that we will get to a point today where the technical mission can go to Athens so we can get a result."

Fears have been mounting over whether Greece could continue in the euro, which in turn would place a question mark of the currency's future viability overall.

Indeed, Schäuble noted that there would be trouble if it fails to implement economic reforms:

"Greece has to carry out reforms. if Greece carries out the reforms, there won't be any problems. If they don't – but let me stress that Greece is carrying them out – then there will be problems."

German Finance Minister Wolfgang Schäuble (centre) with his Irish counterpart Michael Noonan (right)

Most crucially, perhaps, Schäuble did indicate that the IMF will contribute towards another Greek bailout, something that the fund has resisted thus far.

The IMF has called for the EU to give the country substantial debt relief, much to the chagrin of Germany and other eurozone nations. Germany itself has said that Greece's debt programme can only continue with the IMF's help.

Speaking to ARD's Berich aus Berlin over the weekend, Schäuble claimed that he had never made any "Grexit" threats, though the TV network then went on to run recent comments of him stating that Greece was "not yet over the hill" and that the "pressure needed to stay on" the country or it "couldn't stay in the currency union".

Schäuble argued that his message had been the same as the one the IMF conveyed to Greece earlier this month.

The IMF forecast that government debt in Greece would reach 160% of gross domestic product (GDP) by 2030, and would "become explosive thereafter", with IMF European department director Poul Thomsen telling reporters:

"We are saying that Greece needs to take some fairly difficult decisions to make its budget much more growth-friendly."

Greece hit back at this annual assessment, with finance minister Euclid Tsakalotos arguing that it was not based on recent evidence.

Bank of Greece governor Yannis Stournaras also called the report unduly pessimistic and said that it downplayed progress in the financial sector.

German Chancellor Angela Merkel and IMF managing director Christine Lagarde meet on Wednesday, with Greece expected to be top of the agenda.