Reviled in Greece for pushing the bitter medicine of austerity, the IMF has nonetheless thrown Athens a bone by urging European countries to cough up more money to ease Greece’s titanic debt load.
Ignoring its own procedures, the International Monetary Fund threw caution to the wind Thursday and shook up things both in Brussels and Athens, two days before the referendum in Greece on accepting new bailout terms.
The IMF acknowledged Greece is an economic mess and needs at least 50 billion euros ($56 billion) over the next three years.
But the lending giant also said Greece’s European partners have no choice but to restructure Greece’s debt and even, in the worst-case scenario, accept a write-off of part of it.
A report released Thursday by the IMF said the European Union may need to take losses of 53 billion euros on money it has lent to Greece.
At loggerheads with its international creditors, Greece jumped at the opportunity, at the risk of relying on the recommendations of an institution it loathes.
Embracing key proposals in the report, Greek Prime Minister Alexis Tsipras demanded Friday that creditors forgive a third of the country’s debt and allow delayed repayments for the rest.
Much is at stake for Greece’s EU partners.
They are the main contributors to Greece’s successive bailouts, and hold 211 billion euros out of a total of about 280 billion euros that Greece owes. Of all Greece’s creditors, the Europeans are the most heavily exposed to losses.
So it comes as no surprise that European leaders were less than thrilled by the recommendations of the IMF.
Germany, fiercely opposed to debt relief, quickly cried foul.
One cannot conclude that a debt restructuring is necessary, said Martin Jaeger, a spokesman for German Finance Minister Wolfgang Schaeuble.
Eurogroup chief Jeroen Dijsselbloem said the IMF analysis on Greek debt restructuring was based on outdated figures.
He addressed a sensitive issue: the IMF report was completed a week ago, before a string of critical events in the long-running Greek debt drama.
Those events include the calling of a referendum Sunday on whether to accept new bailout terms, the end of an EU aid plan for Greece and Greece’s defaulting on a loan payment to the IMF.
On Friday, Tsipras urged thousands of supporters at a rally in Athens to vote “No” in the weekend referendum, with the latest polls suggesting the plebiscite was too close to call.
So the report runs the risk of dividing Greece’s main creditors — the IMF, the European Union and the European Central Bank — which have already squabbled several times on the issue of debt.
In 2012, the IMF obtained a promise from the Europeans to take Greece’s debt levels substantially below the level of 110 percent of GDP by 2022.
But this commitment was never kept, and Greek debt these days is close to 180 percent of economic output.
Ah same suh mi waan Miss Portia roll up tuh IMF and demands dat dem write off Jamaica debt….at least 1/3:travell
hayyyyyyyyyy
You know seh mi read one article inna di Chicago Tribune & di author seh Jamaica is the Greece of the western hemisphere smh I just feel bad fi Greece god know it nuh look good at all. Jamaica betta nuh mek sumn like this hold dem
Jamaica’s debt to GDP was about 140% at its highest. Greece has a debt to GDP ratio of about 180%. The difference between them is that Jamaica is willing to go down on their knees and blow the IMF, have the citizens suck salt through a wooden spoon so we all don’t end up starving.
Greece is part of the European Union and despite having useless politicians like Jamaica run up a huge un-payable debt, they are not willing to act humble and take some austerity under them backside. After all they are the world’s oldest democracy and a full member of the EU, so they feel they should be bailed out and continue to leech off the rest of Europe.
Another reason Greece is in a slightly stronger position than Jamaica is than when they got membership to the EU, they borrowed a ton load of money from other European Banks who would suffer huge loses if Greece defaults. So, it’s in their best interest to try to settle things amicably with Greece. They also got a lot of money from the IMF and other multilaterals which would go down the drain. Not to mention all of the Greek people that could end up as refugees in other EU countries if things get really bad. So, the referendum on Sunday will decide whether they should accept austerity or not. This decision might have some bearing on whether they stay in the EU or are kicked out.
If Jamaica on the other hand defaults, we would just be another Haiti that nobody gives two f**ks about. Worse like how the US gay lobby have it out for us, don’t bother expect any Aid-for-Jamaica charity events.