IMF will not be able to approve third Greek bailout
Greece may find it more difficult to secure a third bailout after International Monetary Fund officials argued that the country would not be eligible for further loans, according to a leaked account of an IMF board meeting.
The IMF board was told by staff at a two-hour board meeting that Greece's towering debts and reluctance to reform its economy disqualified it from another bailout, according to documents obtained by the Financial Times.
While the Washington-based lender's negotiators will join the bailout negotiations in Athens but the fund will be unable to decide whether to agree a new programme for several months.
On Wednesday, the fund's managing director Christine Lagarde said "for any programme to fly, a significant debt restructuring should take place", as otherwise the IMF's projections have inked in Greek debt rising to 200% of GDP before the end of 2017.
The “strictly confidential” document obtained by the FT revealed that IMF staff will “participate in policy discussions” to help make sure the new bailout “is consistent with what the Fund has in mind” but “cannot reach staff level agreement at this stage”.
Market analyst Jasper Lawler of CMC Markets said the news "cast a long shadow over Greek bailout negotiations".
He pointed out that Germany has previously said it requires the IMF to be part of any agreement, "so with a decision pending from the IMF for months, the chance of a bailout programme being agreed before a €3.2bn payment is due to be paid by Greece to the ECB on August 20 is next-to-none".