Published: Thu, February 09, 2017
Markets | By Terence Owen

Greece hits back at IMF's "explosive" prediction

Greece hits back at IMF's

Talks stalled between Greece and its global creditors over how to complete a review of its 86 billion-euro ($92 billion) bailout after the IMF questioned the nation's economic and budget targets as well as its debt sustainability.

The IMF has been at loggerheads with other members of the so-called troika of creditors involved in Greece's bailout for nearly a year.

That debt relief must be accompanied, however, by "strong policy implementation to restore growth and sustainability", it said.

The fund reiterated its view that Greece's debt is unsustainable.

Eurogroup head Jeroen Dijsselbloem said on Tuesday he had been "surprised" by the IMF's tough tone, saying: 'Greece is already doing rather better than what is described in the report.

More debt relief is the condition set by the International Monetary Fund to lend more to Athens, but that demand is staunchly resisted by Germany and other fiscal hardliners in the single currency zone.

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The IMF has always been at loggerheads with Europe over whether Greece must meet a budget surplus target of 3.5 per cent of GDP or 1.5 per cent of GDP before further progress can be made with the €86 billion bailout agreed in 2015.

Since the financial crisis left it buried in debt and unable to issue bonds in financial markets, Greece has relied on global bailouts.

The letter is a response to the IMF's report published on Monday which proposed, among other measures, broadening the personal income tax base and rationalizing pension spending and reducing non-performing loans (NPLs).

The IMF yesterday said that a majority of its board felt strongly that Greece could not be subject to more austerity, even though this is demanded by Germany. It also needs to agree another bailout deal before the next meeting of eurozone finance ministers in two weeks.

The report on Greek debt was prepared by IMF staff, and not all the directors of the fund agreed with everything it said.

That would allow the country to join the European Central Bank's bond-buying programme, which would boost market confidence and make it easier for Greece to return to the bond market later this year.

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