The International Monetary Fund (IMF) has attached the eurozone over the bailout terms offered to Greece.
In memo issued to eurozone leaders before they made the deal but only now made public, the IMF said that Greece’s public debt was “highly unsustainable” and urged leaders to offer debt relief “well beyond what has been under consideration to date”.
The IMF recommended that Eurozone countries should give Greece 30 years to payback its debts or accept a 30% haircut upfront. Without these measures, the IMF says that Greece’s public debt could reach 200% of GDP in the next two years, which it described as “highly unsustainable”.
The IMF reinforced its position on Tuesday and said that it would not be able to disburse the €16.4bn of its own funds that eurozone officials were counting on unless some agreement on debt relief was included in the deal.
Currently, the bailout deal agreed by eurozone leaders and to be put to the Greek people includes neither measure. Instead, the three-year deal on offer includes a contribution of between €40bn and €50bn from eurozone countries, with the rest of the money coming from selling off state assets and the financial markets.
Greek Prime Minister Alexis Tsipras will find it difficult convincing the Greek people of a package of deep austerity and further loans, when the IMF has doubted its effectiveness and called for debt relief terms very similar to what the Greek Syriza party officials have been asking for from the beginning.