The International Monetary Fund (IMF) has warned that Greece needs $55bn and massive debt relief over the next three years to stabilise its finances.
It said on Thursday that this sum, coupled with discounted interest rates and a longer debt repayment period from its creditors, would keep the country going from October to the end of 2018.
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However, the IMF’s analysis was made before Greece defaulted on its IMF loans on Tuesday, and before it closed its banks on Monday, meaning the outlook is now even worse.
The IMF also said that Greece’s finances have deteriorated because Athens has been slow with enacting economic reforms.
The institution’s worsening assessment came as Greeks prepare to vote in a referendum – either to accept or reject the conditions of further loans.
The Greek government said the IMF report “completely justifies” Greece’s position on debt sustainability.
Prime Minister Alexis Tsipras’ government has long argued that any new deal with Greece’s creditors would have to address the country’s debt by including some form of restructuring or debt relief.
Of the $55bn that the IMF believes Greece needs, it said the troika of European creditors – the European Union, the European Central Bank and the IMF – will need to come up with $40bn.
It recommended that credit be offered on “highly concessional terms”, that would give Athens low interest rates and long repayment periods.