Greece: IMF condition its assistance to a debt relief – The World

The euro area must go ” much further “ than expected to reduce the debt of Greece and could even be forced to erase part, says the International Monetary Fund in a report released Tuesday, July 14.

“The debt of Greece may now be viable with measures relief “, says the IMF report delivered Saturday to the European authorities, or before the agreement that determines a new aid plan in Athens was signed. The text, signed Monday morning, provides for a new aid of 82 to 86 billion, provided that are quickly adopted a series of reforms in Athens. Claimed by Alexis Tsipras since his arrival at the head of the country, the pre-agreement makes only brief mention of a possible Greek debt relief

Read the details. What the Greece agreed in return for financial aid

In its report, the Fund nevertheless ensures that Greek debt is “totally unsustainable” and anticipates that it will approach 200% of its gross domestic product in “the next two years” , against about 175% now.

In this context, the Fund believes that Europe has to choice but to ease the Greek debt – a hard-fought option by Germany – condition for the participation of the institution to the new bailout, desired by the eurozone finance ministers. “We made it clear (…) We need a concrete and ambitious solution to the debt problem (…) If given a grace period of 30 years, they are allowed to reduce debt by finding growth “, said a member of the International Monetary Fund who requested anonymity told Reuters

Read also:. Greek Crisis: The Role ambiguous IMF

The IMF submitted three options to Europeans. The first would extend from 10 to 30 years “grace period” in which Greece would not have to repay its debt to Europeans. The second lies in the “annual transfer” of funds to Greece, and the third would be a “debt forgiveness” outright, the report lists.

Beyond the question of debt, the IMF estimates that worsening situation in Greece could require the “additional exceptional financing Europeans” in excess of 85 billion euros Budget hole envisaged by the IMF – 25 billion more than in the previous note, two weeks ago. – and held more or less, for the euro area as a pre-agreement with Greece