Exclusive: IMF says Greek debt 'highly unsustainable', debt relief 'essential' - draft memorandum

Tue Apr 12, 2016 1:15pm EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Renee Maltezou

ATHENS (Reuters) - The International Monetary Fund wants Greece's European partners to grant Athens substantial relief on its debt which it sees remaining "highly unsustainable", according to a draft IMF memorandum seen by Reuters.

Earlier on Tuesday, Greece and inspectors from its EU/IMF lenders adjourned talks on a crucial bailout review, mainly due to a rift among the lenders over a projected fiscal gap by 2018 and over Athens' resistance to unpopular reforms.

They will resume the review after this week's IMF spring meetings in Washington, where the lenders are also expected to discuss Greek reforms and debt.,

Greek Finance Minister Euclid Tsakalotos and German Finance Minister Wolfgang Schaeuble, who told Reuters on Tuesday that he saw no need for debt restructuring, will also be there.

"Despite generous concessional official financing and further reform plans ... debt dynamics are projected to remain highly unsustainable," the IMF draft said. "To restore debt sustainability, in addition to our reform efforts, decisive action by our European partners to grant further official debt relief will be essential."

EU institutions expect Greece to have a fiscal shorfall equivalent to 3 percent of economic output in 2018, while the IMF projects a 4.5 percent shortfall.

The EU institutions also believe Athens can reach a primary surplus - the budget balance before debt-servicing costs - of 3.5 percent of GDP by 2018, as targeted in its latest financial bailout.

But the IMF's draft Memorandum of Financial and Economic Policies (MFEP), which is compiled during the review, projected a primary deficit of 0.5 percent this year, a surplus of 0.25 percent in 2017 and a primary surplus of just 1.5 percent in 2018.   Continued...

 
Greek Prime Minister Alexis Tsipras looks on as he arrives to welcome Portugal's Prime Minister Antonio Costa (not pictured) at the Maximos Mansion in Athens, Greece April 11, 2016. REUTERS/Alkis Konstantinidis