WASHINGTON, D.C.: The International Monetary Fund (IMF) said on Thursday (Friday in Manila) it would not join a new bailout program for Greece until conditions for debt sustainability, including debt relief and economic reforms, are clearly assured.
“In order to ensure that medium-term sustainability, there is a need for difficult decisions on both sides . . . difficult decisions in Greece regarding reforms, and difficult decisions among Greece’s European partners about debt relief,” a senior IMF official said.
Speaking to journalists, the official said the IMF can only support a financial rescue program “that is comprehensive.”
“One should not be under the illusion that one side of it can fix the problem,” he said.
“What is clear is that it will be some time before the two sides are ready to take these decisions.”
The statement came as representatives of Greece’s official creditors—the IMF, European Commission, European Central Bank, and the European Stability Mechanism—began meetings in Athens to prepare the proposed new 86 billion euro ($94 billion) bailout program for the country.
In the preliminary deal mapped out between the parties on July 13, the EU insisted that the IMF be part of any new program, after two IMF-backed rescue operations since 2010 failed to restore the country’s economy.
No change in position
The IMF, though, conditioned its participation on the EU and Greece creating the conditions of debt “sustainability”—that Greece would be able to return to economic growth and service its huge debt, currently about 170 percent the size of its economy.
The senior IMF official, speaking on condition of anonymity, reiterated that stance after a Financial Times report suggested the Fund was standing further back from a new rescue program.
In an IMF executive board meeting that took place Wednesday, IMF staff, according to the FT report, stressed that Athens needed more progress on reforms, and the country’s European Union creditors needed more clear commitment on debt relief, before the Fund would be allowed under its own rules to join in.
But the official said Thursday that it was already understood that detailed plans for debt relief would not come for some months under current arrangements, and so the IMF—though participating in the preparations—would not be able to commit to join in funding the new bailout until then.
“It is clear that it will take some time before the two sides are ready to take these decisions. It was made clear at the meeting of European leaders a few weeks ago that they were not ready to consider the debt operation before the fall,” he said.
“And I think it’s also clear from discussions from the Greek authorities that some of the necessary decisions regarding particular fiscal, structure reforms will only be taken in the coming months.”
“Everybody understands that the IMF can only begin at that time when these decisions of these two sides are taken,” he said, adding that “there is nothing new that we have decided.” AFP