The International Monetary Fund (IMF) said that Greece would need a long period without debt payments to help it achieve sustainable finances in case the European Union does not agree to cut the debt itself. “It is possible to restore debt sustainability without upfront haircuts, although this would involve providing very concessional loan terms including long grace and maturity periods and very low interest rates,” IMF spokesman Gerry Rice said.
The IMF comment comes at the time when Greece’s EU creditors are about to discuss how to reduce the country’s debt burden, which is in fact IMF’s condition for its further contributions to Greece’s ongoing bailout efforts. The IMF did not provide more details on its views but it confirmed that it had asked Brussels to give Athens time until 2040 without debt payments before it starts paying back both principal and interest on its debt. Mr Rice also added that he was “not aware” of alleged discussions that the debt relief could also involve more expensive IMF loans to Greece.
Greece is fighting for debt relief from its EU creditors saying that the current debt payments are too big and prevent the Greek economy from recovering and achieving a degree of sustainability. Athens also argues that the reforms required by the creditors are too onerous, which is also something that the IMF is currently looking into. “We don’t want more austerity for Greece and we certainly don’t want more of the burden to fall on the poor and the most vulnerable,” Mr Rice said. However, Germany is willing to give Greece debt relief only till 2018 after it has fully met its obligations tied to the bailout.