New | IMF will not join Greece bailout until debt concerns addressed
The International Monetary Fund said Thursday it would not join a new bailout programme for Greece until conditions for debt sustainability, including debt relief and economic reforms, are clearly assured.
“In order to ensure that medium-term sustainability, there is a need for difficult decisions on both sides... difficult decisions in Greece regarding reforms, and difficult decisions among Greece’s European partners about debt relief,” a senior IMF official said.
Speaking to journalists, the official said the IMF can only support a financial rescue programme “that is comprehensive.”
“One should not be under the illusion that one side of it can fix the problem,” he said. “What is clear is that it will be some time before the two sides are ready to take these decisions.”
The statement came as representatives of Greece’s official creditors -- the IMF, European Commission, European Central Bank, and the European Stability Mechanism -- began meetings in Athens to prepare the proposed new 86 billion euro (US$94 billion) bailout program for the country.
In the preliminary deal mapped out between the parties on July 13, the EU insisted that the IMF be part of any new programme, after two IMF-backed rescue operations since 2010 failed to restore the country’s economy.
The IMF, though, conditioned its participation on the EU and Greece creating the conditions of debt “sustainability” -- that Greece would be able to return to economic growth and service its huge debt, currently about 170 per cent the size of its economy.
“It is clear that it will take some time before the two sides are ready to take these decisions. It was made clear at the meeting of European leaders a few weeks ago that they were not ready to consider the debt operation before the fall,” he said.
The tough reforms demanded by creditors in return for the bailout have caused a rift within Greece’s ruling Syriza party, prompting Prime Minister Alexis Tsipras to raise the prospect of early elections if anti-austerity hardliners continued to oppose the rescue package.
Members of the party’s central committee voted in favour of the premier’s call to hold an emergency congress in September to determine the government’s strategy and preserve unity within the party.
