Greek debt crisis: Greece 'seeking a new loan' from the IMF in step closer to bailout

 

Debt-crippled Greece took a step closer to a huge third international bailout by formally requesting IMF help, but sources said "logistical problems" were delaying the start of talks in Athens.

Photo: Finance minister Euclid Tsakalotos wrote Greece was "seeking a new loan" from the IMF in a letter to managing director Christine Lagarde. (AFP: Angelos Tzortzinis)

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The Greek government, which is seeking a three-year bailout worth up to 86 billion euros ($129 billion) to avert financial meltdown and a chaotic exit from the Eurozone, had initially planned to go without fresh help from the IMF as it considered the agency too wedded to draconian austerity measures.

But in a letter to IMF managing director Christine Lagarde, finance minister Euclid Tsakalotos wrote Greece was "seeking a new loan" from the IMF.

He noted Greek parliament had passed two laws enshrining a series of tough reforms demanded by the creditors, including tax rises and a pensions overhaul, in a step closer to finalising the deal.

"The Greek authorities have committed to implement a number of policies that would enhance fiscal sustainability, strengthen fiscal stability, sustain long-term growth and, importantly, spread the cost of economic adjustment in a fair way," Mr Tsakalotos wrote in the letter, dated July 23 and released to the public on Friday.

 

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Greece drama unfolds

June 28:
Greek banks are closed, withdrawal limits are set to 60 euros ($89) a day
July 5:
Greek voters reject terms of a bailout proposition with 61.31 per cent voting "No", boosting prime minister Alexis Tsipras at the negotiating table
July 6:
Yanis Varoufakis resigns as Greek finance minister to improve relations with Eurozone creditor countries, and is replaced by Euclid Tsakalotos, who has been steering talks with EU-IMF creditors
July 7:
Eurozone finance ministers meet in Brussels but no proposal reached European Commission head Jean-Claude Juncker, who is not in favour of Greece leaving the EU, warns a Grexit scenario has been prepared "in detail"
July 8:
Mr Tsipras is greeted by boos and cheers at the European parliament, says Greece will submit "credible" reform plans and wants to prevent a "divided Europe". His speech draws a mix of boos and cheers from European MPs
July 11:
Greek parliament backs new reform plan, submits proposals to the EU for consideration
July 12:
Eurozone finance ministers meet for talks, planned EUCO summit delayed
July 13:
Greece agrees to tough reforms in return for a three-year bailout worth up to 86 billion euros

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"It is our belief that it will take several quarters before the Greek economy faces up to these challenges and returns to a vigorous and sustainable path to growth with fairness and social inclusion," he added.

Mr Tsakalotos confirmed Greece, which has been bailed out by the European Union, European Central Bank and IMF twice since 2010, had already formally requested a new three-year loan from the Eurozone's bailout fund, the European Stability Mechanism.

Greece's existing aid program from the IMF runs until early 2016, and the letter appears to have been a gesture of goodwill as a new request is not technically necessary.

The request came amid an apparent delay in getting the ball rolling on talks to finalise the package.

Negotiators from the creditors, known collectively as the troika, have not set foot in Athens for more than a year as hostility has grown between the two sides.

On Thursday, Greece said negotiators would fly in to Athens to begin the talks on Friday, but this swiftly became "in the coming days", according to a European Commission spokeswoman, with the location of the talks and offices for the creditors apparently among the sticking points.

"The mission is being prepared. We are still discussing a location as we have to find an accessible place to work, near the ministries," a source close to the negotiations said.

The two sides are under enormous pressure to hammer out the rescue deal before August 20, when Athens is scheduled to make a loan repayment of 3.2 billion euros to the ECB that it cannot currently afford.

'A difficult path ahead'

The IMF warned finalising the deal, which is conditioned on Greece implementing painful reforms, would not be easy.

The Fund took part in the two previous bailouts but has said it will only participate this time around if European creditors reduce Athens' debt burden to a level it considers "sustainable".

Tough bailout terms explained

The key points of the agreement between Greece and its Eurozone partners that includes punishing austerity measures.

"Clearly it's a difficult path ahead, we're just at the beginning of the process," IMF spokesman Gerry Rice said.

In the early hours of Thursday, Greek parliament passed further reforms demanded by creditors for the talks to begin, including changes to the justice system, a bank deposit protection scheme and measures to shore up the liquidity of Greece's banks.

The bill passed by a resounding 230 votes out of the 298 members of parliament present, after a five-hour debate that once again exposed deep divisions in the governing Syriza party over whether to accept more austerity.

While the result is a victory for Prime Minister Alexis Tsipras in that he managed to convince parliament to back him on the bailout, he did suffer a major rebellion from Syriza MPs for the second time in a week — prompting analysts to predict he may be forced to call early elections.

AFP

From other news sites:

• Business Insider: Greece officially requests fresh IMF aid: finance ministry

Greek debt crisis: Greece 'seeking a new loan' from the IMF in step closer to bailout - ABC News (Australian Broadcasting Corporation) © 2015 ABC