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Thursday March 28, 2024

IMF gives Greece something to mull over

WASHINGTON: Reviled in Greece for pushing the bitter medicine of austerity, the IMF has nonetheless thrown Athens a bone by urging European countries to cough up more money to ease Greece´s titanic debt load. Ignoring its own procedures, the International Monetary Fund threw caution to the wind Thursday and shook

By our correspondents
July 05, 2015
WASHINGTON: Reviled in Greece for pushing the bitter medicine of austerity, the IMF has nonetheless thrown Athens a bone by urging European countries to cough up more money to ease Greece´s titanic debt load.
Ignoring its own procedures, the International Monetary Fund threw caution to the wind Thursday and shook up things both in Brussels and Athens, two days before the referendum in Greece on accepting new bailout terms.
The IMF acknowledged Greece is an economic mess and needs at least 50 billion euros ($56 billion) over the next three years.
But the lending giant also said Greece´s European partners have no choice but to restructure Greece´s debt and even, in the worst-case scenario, accept a write-off of part of it.
A report released Thursday by the IMF said the European Union may need to take losses of 53 billion euros on money it has lent to Greece.
At loggerheads with its international creditors, Greece jumped at the opportunity, at the risk of relying on the recommendations of an institution it loathes.
Embracing key proposals in the report, Greek Prime Minister Alexis Tsipras demanded Friday that creditors forgive a third of the country´s debt and allow delayed repayments for the rest.
Much is at stake for Greece´s EU partners.
They are the main contributors to Greece´s successive bailouts, and hold 211 billion euros out of a total of about 280 billion euros that Greece owes. Of all Greece´s creditors, the Europeans are the most heavily exposed to losses.
So it comes as no surprise that European leaders were less than thrilled by the recommendations of the IMF.
Germany, fiercely opposed to debt relief, quickly cried foul.One cannot conclude that a debt restructuring is necessary, said Martin Jaeger, a spokesman for German Finance Minister Wolfgang Schaeuble.
Eurogroup chief Jeroen Dijsselbloem said the IMF analysis on Greek debt restructuring was based on outdated figures.
He addressed a sensitive issue: the IMF report was completed a week ago, before a string of critical events in the long-running Greek debt drama.
Those events include the calling of a referendum Sunday on whether to accept new bailout terms, the end of an EU aid plan for Greece and Greece´s defaulting on a loan payment to the IMF.
On Friday, Tsipras urged thousands of supporters at a rally in Athens to vote "No" in the weekend referendum, with the latest polls suggesting the plebiscite was too close to call.