The International Monetary Fund can only participate in a third bailout of Greece if its EU creditors produce a clear plan for debt sustainability, a senior official said Tuesday.
The Fund, which has partnered with the European Commission and European Central Bank in the two previous, failed rescues of Greece, is seeking more details on how the new plan agreed on Monday will stabilize Greek finances in the short term and over the long run.
EU officials said the plan, which requires tough reforms of Greece for up to 86 billion euros ($95 billion) in financial aid through 2018, would require the International Monetary Fund as a partner in funding and program monitoring.
But the IMF wants to be sure the EU partners have a solid plan that will make it possible for Greece to repay its debts over the long term.
“European member states would like the IMF to stay involved, but clearly, it will have to meet our criteria,” the official told journalists on condition of anonymity.
“One such criteria is debt sustainability, and we have to have an agreement that is sufficiently comprehensive and credible.”
He called the agreement reached between Athens and European leaders “not very concrete,” with some key issues not discussed.
“This is by no means a comprehensive, detailed agreement,” he said.
With Greece already having missed two debt payments to the Fund in the past two weeks, the IMF cannot even engage in talks until the arrears are cleared.
For the IMF executive board to weigh joining the new bailout, “we need a concrete and ambitious solution to this debt problem,” the official said.
“We need much more specificity, both on policy but more certainly on debt relief measures.
“It’s fine for the Europeans to say now that… ‘we stand ready to provide debt relief.’ That is not very concrete,” the official added.
An analysis the IMF presented to EU leaders over the weekend forecasts that Greece will never get back in a position of being able to repay its debts unless “dramatic” measures are taken in the new program to lighten the burden.
The IMF suggested three choices: stretching out debt repayments over decades, with a 30-year grace period, paying cash regularly to Athens to repay its debts or writing down some of the current value of the debt via a “haircut.”