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IMF warns of worsening Greek finances

July 3, 2015

The International Monetary Fund (IMF) has warned that Greece cannot afford to go it alone. A draft report by the fund criticized Greek coalition leaders Syriza for Greece's deteriorating prospects.

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Griechenland Athen Schuldenkrise
Image: picture-alliance/dpa/S. Baltagiannis

The warnings being issued about Greece late on Thursday arose from an IMF report that showed Greece needed an extra 50 billion euros ($55 billion) over the next three years, with more than two-thirds to come from the EU.

The Washington-based fund's new "preliminary draft" analysis of Greek finances said there had been a deterioration in Greece's outlook since Prime Minister Alexis Tsipras and his anti-austerity, leftist Syriza party came to power at the beginning of 2015.

"Very significant changes in policies and in the outlook since early this year have resulted in a substantial increase in financing needs," the draft, the wording of which has yet to be formally approved by the IMF, said.

'Shortfall and vague commitments'

The report, ahead of Sunday's referendum on whether Greece should accept the bailout conditions on offer, cited a nine-billion-euro shortfall in the government's privatization commitments according to the IMF and European Union's bailout programs. It also noted there had only been a vague commitment to further raise money by selling off state assets.

Because targets for the government's fiscal surplus had fallen, the analysis said there was a shortfall of another 13 billion euros.

"Greece faces significantly larger financing needs going forward than we thought last year," one senior IMF official told journalists.

Need for change of tack?

The IMF indictment comes after Greece defaulted on a 1.6-billion-euro ($1.8 billion) payment to the fund earlier this week.

Although the report slammed Syriza, it did appear to echo the party's call for a fundamental change to the way the debt was paid. The IMF said creditors would need to consider doubling the period of maturity of existing official EU loans to Greece to 40 years, offering a 20-year grace period.

The Greek government's spokesman Gabriel Sakellaridis said the IMF report "fully vindicates" Greece's demands for debt restructuring or a "haircut" that would see creditors write off a portion of what they are owed.

Sakellaridis called the report a "confession of the failure" of the creditors' policies towards Greece.

rc/jr (AFP, AP, dpa, Reuters)