IMF slams eurozone bailout deal to Greece

15 Jul 2015


The bailout deal offered to Greece by the eurozone has been slammed by the International Monetary Fund (IMF).

The fund said Greece's public debt was now "highly unsustainable" and called for debt relief on a scale "well beyond what has been under consideration to date".

The European finance ministers were told that the bailout needed to include measures for restructuring the country's debt.

The European Commission had now proposed a €7-billion "bridging" loan to help Greece pay debt interest.

Part of the money could be used to repay the IMF.

Greece had already missed two deadlines to pay the Fund €1.6 billion in debt interest on loans it had already received, which earned it the dubious honour of being the first major western economy to default on an IMF loan.

The EC's latest proposal for bridging finance might run into opposition from the UK and other non-eurozone members of the EU.

Under the proposal, Greece would be provided short-term financing from the European Financial Stability Mechanism (EFSM).

This fund had been supported by all 28 members of the EU, rather than just the 16 members of the eurozone, which meant UK taxpayers would contribute further to financial support for Greece.

Meanwhile Greece's parliament would vote tonight on whether to ratify a $94- billion bailout deal that called for painful tax hikes and pension cuts, and for Greece to sell state assets.

While the bill was expected to pass, Greek prime minister Alexis Tsipras would need to deal with a revolt from left-wing members of his own leftist Syriza party. Workers across Greece would strike over the austerity measures international creditors want Greece to accept.

If the bill were to fail to get approval from Greece's parliament, Athens would not be able to take up a new rescue package from the European Central Bank, eurozone governments and International Monetary Fund reached at a summit in Brussels on Monday.

Germany and other eurozone members would also need to vote on the measures this week.

Meanwhile, the IMF yesterday called for more debt relief for Greece, that went "far beyond what Europe has been willing to consider so far."

According to the IMF, Greece needed more time to pay off its debts and that creditors might need to accept that some of its loans might need to be completely written off.

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