Tue | Jul 7, 2020

IMF: Greece needs debt relief and 50 billion euros in new financing from October through 2018

Published:Thursday | July 2, 2015 | 1:58 PM
Demonstrators burn a European Union flag during a rally supporting the no vote for the upcoming referendum outside the European Union office in Athens yesterday.


The battle for Greek votes entered full swing yesterday ahead of a crucial weekend referendum that could decide whether the country falls out of the euro. For Greeks, particularly the elderly, the daily struggle to get cash ground on in the face of uncertainty.

Greece's rescue lenders have halted negotiations on a new financial aid programme until after the vote on whether to accept reforms the creditors proposed last week in exchange for bailout loans.

That Greece will now need a third international bailout is a near certainty. The International Monetary Fund (IMF), one of the country's creditors in its two bailouts so far, said yesterday that the country needs debt relief and €50 billion ($56 billion) in new financing from October through 2018.

The analysis was made before Greece defaulted on IMF loans Tuesday and closed its banks Monday. The outlook is worse now.

Debt relief has been one of the main demands of Prime Minister Alexis Tsipras' government, but it met with strenuous resistance in negotiations with Greece's creditors who, apart from the IMF, are other eurozone countries and the European Central Bank.

Growth pact over bailouts

But Tsipras has also been adamant he does not want any more bailouts involving just loans - rather, a different "growth pact" with Europe that will allow the economy to emerge from a depression.

Tsipras called the referendum for Sunday advocating voters reject creditors' proposals, saying it would put the country in a stronger negotiating position.

The idea was dismissed by the head of the eurozone finance ministers' group, Jeroen Dijsselbloem.

"That suggestion is simply wrong," Dijsselbloem told lawmakers in the Netherlands.

European officials and the Greek opposition have warned a "no" outcome Sunday could be tantamount to a decision to leave the euro.

Some European officials have said the Greek referendum amounts to a vote on whether to stay in the euro. The Greek government says that argument is merely an attempt to terrorise the people into voting in favour of destructive austerity policies.

Many Greeks say they will be casting their ballots to end the budget cuts and tax increases imposed in return for bailout loans from other eurozone countries and the IMF.