IMF's call to EU over Greece's debt relief
Greece's European creditors must give the nation "unconditional" debt relief for the International Monetary Fund to provide new financing, the Washington-based fund said, laying out its position as euro-area finance ministers meet in Brussels to discuss the bailout.
Euro-area governments should send a signal to markets that the nation's borrowing burden is sustainable by providing debt relief before the next tranche of Greece's €86bn bailout is disbursed, according to a preliminary debt-sustainability analysis of Greece's finances that the IMF released yesterday.
The IMF is proposing that Greece should be allowed to defer payments on its European bailout loans, underscoring key differences with euro-area lenders over the future of the Greek economy. While Germany has said IMF participation in the Greek bailout is indispensable, the IMF's demands for debt relief may be too extensive for the Europeans to agree on.
"Providing an upfront unconditional component to debt relief is critical to provide a strong and credible signal to markets about the commitment of official creditors to ensuring debt sustainability, which in itself could contribute to lowering market financing costs," the IMF said.