Daily Management Review

IMF Likely Not to Bail out Greece a Third Time: Reports


07/30/2015




A leaked information after an International Monetary Fund board meeting indicates that the the global financial organization would not support claims of Greece to allow the crisis struck country to secure a third bailout.
 
Te Financial Times reported that the continued reluctance of Greece to to reform its economy and the pilling debts disqualified it from another bailout. The report said that the IMF board was told by staff at a two-hour board meeting.
 
Even as the Washington-based global lender's negotiators are slated to join a bailout negotiation in Athens, the meeting would not have any conclusive end as the IMF would not be able to decide whether to agree a new programme for several months.
 
“For any programme to fly, a significant debt restructuring should take place” said the
fund's managing director Christine Lagarde a day earlier. The IMF estim,ates that iof Greece did not immediately enforce strict economic reforms, the Greek debt would rise to 200% of GDP in less than a couple of years, even before the end of 2017.
 
The newspaper claimed to have the possession of a very secret document of the IMF that clearly reveals that the officials of the IMF would only take part in the negotiation meetings for the proposed new bail out so that the the meeting goes on along the lines that the IMF has in mind but it would not be able to come to a staff level agreement at this stage.
 
Analysts said that the news of the possibility of Greece not obtaining a third bailout package would significantly create doubts about the actual possibility of the solving of the Greek crisis.
 
“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 €3.2 billion payment is due to be paid by Greece to the ECB on August 20 is next-to-none" said market analyst Jasper Lawler of CMC Markets said
 
Meanwhile the Greek Prime Minister Alexis Tsipras's is having a tough time managing his own party. The 11th hour deal that Tsipras struck to help Greece remain within the Euro Zone managed to buy Greece some time but brought his ruling leftist party to a near split. About a quarter of the lawmakers of Syriza openly spoke out against the deal alleging that the deal betrayed the ruling party’s anti-austerity roots.

The most serious political challenge to Tsipras at the moment is the deepening crisis within Syriza. Prior to the deal, Tsipras enjoyed unrivaled domination of the Greek political scene and is still believed to be popular despite his sudden U-turn to agree to the stringent bailout terms.

The failure to bring the party to agree ot the austerity measures and the economic reforms in the country would probably result in the IMF not agreeing to bail out Greece for a third time. The ongoing talks between the Greek debt seekers and the European and International Monetary Fund lenders for the 86 billion Euro aid package to keep Athens afloat could be derailed if Tsipras fails to create order within his own party. 

(Source: www.digitallook, www.huffingtonpost.com & www.telegraph.co.uk) 






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