Saturday 1 October 2016

Greece facing loss of key IMF support

Published 05/05/2015 | 07:39

A man holding a Greek national flag and a placard walks in Constitution (Syntagma) Square in Athens May 4, 2015. REUTERS/Alkis Konstantinidis
A man holding a Greek national flag and a placard walks in Constitution (Syntagma) Square in Athens May 4, 2015. REUTERS/Alkis Konstantinidis
A man walks past a Greek flag in the central market of the northern port city of Thessaloniki (AP)

Greece is so far away from meeting the conditions of its bailout that it faces losing IMF support unless European lenders write off large amounts of its sovereign debt, the fund has warned.

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The move could mean the IMF holds back its portion, about half, of €7.2bn aid package that Greece is trying to secure, the Financial Times reported.

If Greece doesn't get the money it's expected to run out of cash this month.

The warning was given to Eurozone finance ministers by Poul Thomsen, head of the IMF's European department.

Sources said IMF data showed Greece is set to run a primary budget deficit of up to 1.5pc of GDP this year.

It was supposed to run a primary surplus of 3pc.

Wide differences over pension and labour reforms continued to dog intensive negotiations between Greece's leftist government and its international creditors despite progress in other areas as the country's cash position becomes increasingly critical.

Government spokesman Gabriel Sakellaridis sounded the alarm on Monday, saying that while Athens intended to meet all its payment obligations, including nearly 1 billion euros to the IMF in May, it needed fresh funds before the end of the month.

"Liquidity is a pressing issue," Sakellaridis told a news conference. "The Greek government is not waiting until the end of May for a liquidity injection. It expects this liquidity to be offered to the Greek economy as soon as possible."

In a sign of Greece's increasingly frantic efforts to secure relief, Deputy Prime Minister Yannis Dragasakis will travel to Frankfurt to hold talks with European Central Bank President Mario Draghi on Tuesday, a government official said.

With lenders ruling out fresh aid until Athens implements all required reforms, Greece is hoping progress in negotiations will pave the way for the ECB to permit Greek banks to buy more short-term treasury bills, easing the government's cash crunch.

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