The IMF said it can’t reach a ‘staff level agreement’ on Greece’s €86 billion bailout at this stage and will make the decision on further involvement in the deal only after Athens agrees on a ‘comprehensive set of reforms’ and creditors on debt relief.
The IMF will not take part in a new bailout program for Greece for several months or even until next year, according to a "strictly confidential" four-page summary of the fund’s board meeting Wednesday seen by Financial Times. The IMF said it will only "participate in policy discussions” to make sure the new bailout deal “is consistent with what the fund has in mind.”
The fund said it will only decide whether to participate during ‘stage two’ after Greece has “agreed on a comprehensive set of reforms” and after creditors have “agreed on debt relief.”
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This puts at stake the future of the rescue deal for Greece, that many hope should eliminate the risk of Greece leaving the euro and jeopardizing the whole currency bloc.
The IMF’s involvement in the deal is crucial for some European countries, especially for Germany. Earlier this month Germany's Finance Minister Wolfgang Schaeuble said some members of the government in Berlin would have preferred that Greece take a “time-out” from the eurozone rather than give it another bailout.
The IMF board’s announcement comes as negotiations are held between the creditors and Athens. Last week Greek lawmakers backed a second package of austerity measures demanded by the country’s lenders.
A 3-year financial aid deal which requires tax hikes and raising the retirement age caused much debate and criticism in the Greek government.
Greek Prime Minister Alexis Tsipras on Thursday claimed the country faced a dilemma between a difficult compromise and a disorderly default when agreeing the deal. He said that a Grexit was not a choice while the deal was also not of their choice.
Earlier this month Greece repaid €6.8 billion to the ECB and the IMF, after it received a €7 billion bridging loan from international creditors.
Greece intends to finish the talks by August 20, when a €3.2 billion bond repayment to the ECB is due.
The IMF has repeatedly said European creditors should write-down a massive amount of Greek debt or give Greece a 30-year grace period if they want it to recover and repay. The fund called Greece’s debt unsustainable, warning the €86 billion program will not save Greece from financial collapse.
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