Larry Elliott — IMF says Greece needs extra €50bn in funds and debt relief

International lender issues strong message to Europe by warning that Athens’ debts are unsustainable and it needs 20-year grace period on debt repayments

The International Monetary Fund has electrified the referendum debate in Greece after it conceded that the crisis-ridden country needs €50bn (£35bn or $55bn) of extra funds over the next three years and large-scale debt relief to create “a breathing space” and stabilise the economy. 

With three days to go before a knife-edge referendum, 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 package to the Washington-based organisation’s board unless it included both a commitment to economic reform and debt relief. 

According to the IMF, Greece should have a 20-year grace period before making any debt repayments and that final payments should not take place until 2055. 

The IMF’s analysis will be seized upon by Alexis Tsipras, the Greek prime minister, who has been insisting that he will only agree to tough new austerity measures if Greece is granted debt relief. 

Maybe Joe Stiglitz's allegation of "criminal responsibility" in a recent Time interview woke some folks up at the IMF. Dump the blame on the Germans.

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 Guardian
IMF says Greece needs extra €50bn in funds and debt relief
Larry Elliott, Economics editor
ht Clonal