IMF says Greece needs extra €60 bn in funds and debt relief
– Source: The Guardian, 2 July 2015. Click here for full article
The IMF said that is was releasing its preliminary draft debt sustainability analysis as a result of the leaks of documents reported in the Guardian earlier this week.
The International Monetary Fund has electrified the referendum debate in Greece after it conceded that the crisis-ridden country needs up to €60bn (£42bn) of extra funds over the next three years and large-scale debt relief to create “a breathing space” and stabilise the economy.
With days to go before Sunday’s knife-edge referendum that the country’s creditors have cast as a vote on whether it wants to keep the euro, the IMF revealed a deep split with Europe as it warned that Greece’s debts were “unsustainable”.
Fund officials said they would not be prepared to put a proposal for a third Greek bailout to the Washington-based organisation’s board unless it included both a commitment to economic reform and debt relief.
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According to the IMF, Greece should have a 20-year grace period before making any debt repayments and final payments should not take place until 2055. It would need €10bn to get through the next few months and a further €50bn after that.
Significantly, it said its assessment had “not been agreed with the other parties in the policy discussions” – an admission that the fund is at odds with its troika partners, the European commission and the European Central Bank – over the need for debt relief.
The fund has traditionally viewed debt relief as an integral part of any package to improve the economic prospects of a country seeking help, but it has met resistance from European governments fearful that the cost would have to be met by their own taxpayers.
In response to criticism that the IMF has failed to tackle intransigence in European capitals against a further debt write-off, a senior IMF official said: “We are asking the Greeks to do very difficult things. We are also asking the Europeans to do something very difficult.
“The extension of maturities [by the EU] on Greek debt would be a dramatic move.”
He said that while “it was a fact that Europe has already provided considerable debt relief in GDP terms” to Greece, the current dire situation meant they needed to do more.
The official said he had refused to put forward plans for a further bailout of Greece to the IMF board without a comprehensive deal that included debt relief.
“We cannot go to our board with this report unless we have a credible programme that is sustainable and with a policy from the EU on debt relief. We want a comprehensive solution and cannot go to the IMF board without it.”
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For more on the Greek Crisis:
* FromThinking about Economy and Democracy – here.
* From Network Dispatches on the Greek Crisis – here.
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Bio: Trained as a development economist, Eric Britton is a public entrepreneur specializing in the field of sustainability and social justice. Professor of Sustainable Development, Economy and Democracy at the Institut Supérieur de Gestion (Paris), he is also MD of EcoPlan Association, an independent advisory network providing strategic counsel for government and business on policy and decision issues involving complex systems, social-technical change and sustainable development. Founding editor of World Streets, his latest work focuses on the subject of equity, economy and efficiency in city transport and public space, and helping governments to ask the right questions and in the process find practical solutions to urgent climate, mobility, life quality and job creation issues. More at: http://wp.me/PsKUY-2p7