It was never going to be easy – not with so many players involved.
Just days after European leaders hammered out a bailout deal in Brussels to keep Greece in the euro, the International Monetary Fund is already calling for changes that have the potential to torpedo Monday’s fragile compromise.
A new study sent to euro-zone governments by the IMF, and seen by Handelsblatt, shows that Greece will need far bigger debt relief than its 18 euro-zone partners have been prepared to envisage.
“The dramatic deterioration in debt sustainability points to the need for debt relief on a scale that would need to go well beyond what has been under consideration to date – and what has been proposed by the ESM,” the IMF said, referring to the European Stability Mechanism bailout fund.
The IMF’s plea for more bailout money is partly due to the damage done to Greece’s economy and its banks in the last two weeks, a time when banks have been closed and Greeks restricted to taking no more than €60 out of their bank accounts every day.
The IMF warned that Greece’s debt would climb to almost 200 percent of gross domestic product in the coming two years. The paper also listed risks that could raise Greece’s financial requirement above the planned €86 billion envisaged by the third bailout deal thrashed out in 17 hours of talks that lasted into Monday morning.