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IMF steps up Greek bailout criticism over debt relief package IMF steps up Greek bailout criticism over debt relief package
(35 minutes later)
The International Monetary Fund has stepped up its criticism of the Greek bailout proposals, warning that the plan “categorically” will not work without substantial debt relief.The International Monetary Fund has stepped up its criticism of the Greek bailout proposals, warning that the plan “categorically” will not work without substantial debt relief.
The head of the IMF, Christine Lagarde, said in an interview on France’s Europe1 Radio that only a “complete package” would receive the backing of the body, which is one of three creditors in the proposed Greek deal. Asked if the plan devised by Greece’s eurozone creditors could succeed without debt relief, Lagarde said: “ Categorically, no.” The head of the IMF, Christine Lagarde, said in an interview on France’s Europe1 Radio that only a “complete package” would receive the backing of the body, which is one of three creditors in the proposed Greek deal. Asked if the plan devised by Greece’s eurozone creditors could succeed without debt relief, Lagarde said: “Categorically, no.”
In an explosive report released earlier this week the IMF said Greece’s debts can only be sustainable with debt relief measures going far beyond what the eurozone has offered so far.In an explosive report released earlier this week the IMF said Greece’s debts can only be sustainable with debt relief measures going far beyond what the eurozone has offered so far.
The eurozone is expected to start formal talks with Greece on securing a bailout worth up to €86bn (£60bn), once national parliaments in Germany, Austria and other countries have given their approval.The eurozone is expected to start formal talks with Greece on securing a bailout worth up to €86bn (£60bn), once national parliaments in Germany, Austria and other countries have given their approval.
The Bundestag is expected on Friday to support chancellor Angela Merkel’s decision to open talks with Greece on a third bailout, despite the view of Germany’s finance minister, Wolfgang Schäuble, that a Greek exit from the eurozone may be a better option.The Bundestag is expected on Friday to support chancellor Angela Merkel’s decision to open talks with Greece on a third bailout, despite the view of Germany’s finance minister, Wolfgang Schäuble, that a Greek exit from the eurozone may be a better option.
France and Finland have already voted in favour of talks with Greece, while Austria, Estonia, Latvia and Spain will also be holding votes.France and Finland have already voted in favour of talks with Greece, while Austria, Estonia, Latvia and Spain will also be holding votes.
Finland’s eurosceptic foreign minister Timo Soini backed down from earlier threats not to support the Greek bailout, but said the choice was between plague and cholera.Finland’s eurosceptic foreign minister Timo Soini backed down from earlier threats not to support the Greek bailout, but said the choice was between plague and cholera.
Soini made his political career by opposing Greece’s bailouts, which he once described as “immoral”.Soini made his political career by opposing Greece’s bailouts, which he once described as “immoral”.
He told the Helsingin Sanomat newspaper he had considered resigning over the issue. He added that Finland would not be giving any new money to Greece, because it has already made its contributions to the eurozone bailout fund, the European Stability Mechanism.He told the Helsingin Sanomat newspaper he had considered resigning over the issue. He added that Finland would not be giving any new money to Greece, because it has already made its contributions to the eurozone bailout fund, the European Stability Mechanism.
Related: IMF appears to be only one looking out for Greece's long-term future
Talks on a new bailout for Greece under the ESM are expected to last around four weeks and will expose the tension between Greece’s creditors. The IMF is urging eurozone countries to allow Greece a 30-year grace period before it has to start paying off its debts.Talks on a new bailout for Greece under the ESM are expected to last around four weeks and will expose the tension between Greece’s creditors. The IMF is urging eurozone countries to allow Greece a 30-year grace period before it has to start paying off its debts.
But eurozone governments have so far resisted substantial debt relief and are implacably opposed to any measure that could lead to writing off Greece’s debts, otherwise known as a “haircut”.But eurozone governments have so far resisted substantial debt relief and are implacably opposed to any measure that could lead to writing off Greece’s debts, otherwise known as a “haircut”.
The IMF sees several options, other than a haircut, such as giving Greece more time to pay back debt or reducing interest rates.The IMF sees several options, other than a haircut, such as giving Greece more time to pay back debt or reducing interest rates.
Lagarde said the bailout had to be agreed on a very tight schedule: “It is not going to be a path of roses, it will be complicated, it will be laborious.”Lagarde said the bailout had to be agreed on a very tight schedule: “It is not going to be a path of roses, it will be complicated, it will be laborious.”
The deal cannot come soon enough for Greece, which has €12bn worth of debt repayments falling due in the next month, as well as the usual costs of public sector wages and pensions.The deal cannot come soon enough for Greece, which has €12bn worth of debt repayments falling due in the next month, as well as the usual costs of public sector wages and pensions.
Later on Friday Greece is likely to get confirmation of a €7m bridging loan from an EU-wide bailout fund, despite reluctance of non-eurozone countries, such as the UK and the Czech Republic, to be dragged in.Later on Friday Greece is likely to get confirmation of a €7m bridging loan from an EU-wide bailout fund, despite reluctance of non-eurozone countries, such as the UK and the Czech Republic, to be dragged in.