An FT report, citing a confidential summary it obtained of the IMF board’s meeting on Wednesday, said that IMF staff had determined that while the Fund could participate in negotiations aimed at providing a third round of relief to Greece, the country was disqualified for any IMF bailout given its high debt levels and poor reform record.
“The Fund will only decide whether to participate during a ‘stage two’ after Greece has ‘agreed on a comprehensive set of reforms’ and, crucially, after eurozone bailout lenders have ‘agreed on debt relief’,” the FT reported, adding that IMF staff were not in full agreement on the issue.
The decision means that an IMF decision on any further bailout for Greece could stretch for months and possibly into 2016 and raises questions about whether it will ultimately join euro zone efforts, according to the newspaper’s report.
The European Union, led by Germany, and the IMF had agreed on a new 86 billion euro aid package to keep Athens afloat, and negotiations on the package were continuing on Thursday. Greek Prime Minister Alexis Tsipras’ government is seeking to wrap up negotiations in time for a major debt payment due on Aug. 20.
According to the FT report, Germany’s representative to the IMF board said Berlin “would have preferred the Fund . . . move in parallel” with the eurozone bailout talks. Instead, it now faces the prospect of trying to move an €86bn bailout through a sceptical Bundestag in a matter of weeks without the IMF’s imprimatur.