The International Monetary Fund — seen as a crucial partner to the eurozone country’s bailout — faulted the deal saying official EU creditors had still not spelled out long-term debt relief indispensable to strengthen Greece’s finances. (Reuters)

IMF says Greece still at long-term risk despite bailout deal

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A breakthrough European Union agreement today to release fresh bailout funds to Greece averted the threat of a massive default on its debt in coming months.

But the International Monetary Fund — seen as a crucial partner to the eurozone country’s bailout — faulted the deal saying official EU creditors had still not spelled out long-term debt relief indispensable to strengthen Greece’s finances.

Hours after eurozone finance ministers announced that they would unlock 10.3 billion euros (USD 12 billion) in bailout cash that Greece needs for looming bond payments, the IMF said it could not add its funds to the bailout as long as its demand for a detailed debt-relief plan had not been met.

European officials cheered the agreement reached after late-night talks as a breakthrough toward reviving the Greek economy, and claimed the IMF had agreed to join in with its own loans by the end of this year.

“The crisis between Greece and the eurozone is over and behind us,” French Finance Minister Michel Sapin told a cabinet meeting in Paris today.

“By this, any liquidity crisis is excluded for the next months,” said German Finance Minister Wolfgang Schaeuble.

But the IMF confirmed critics who said the Eurogroup, which represents Greece and the other 18 countries that use the euro, had just “kicked the can down the road,” saying it had not received sufficient assurances that European creditors will deliver on much-needed debt relief.

“Greece is in a situation where it needs a disbursement, and so we were certainly willing to concede on some points,” a senior IMF official, speaking on condition of anonymity, told journalists hours after the talks concluded.

“But we have not conceded on the point that we need adequate assurances regarding debt relief before we go to our board… I am hopeful we will get there.”

The immediate consequence of the agreement in Brussels was that Greece will receive the funding it needs to make huge payments due on loans from the European Central Bank and IMF between July and October, and to continue to implement needed reforms through the end of the year.

The disbursement rewards Athens for meeting the reform requirements of the 86-billion-euro bailout program agreed last July.
But the deal still did not address how the country will avoid being overwhelmed over the long run by its roughly 250 billion euros in debt to official creditors.

 

By: | Washington

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