IMF urges debt relief for Greece

Greek PM Alexis Tsipras, center, was once the darling of anti-austerity activists but may now face a no confidence vote [Xinhua]

Greece’s benchmark Athens Composite Index (ATG) closed more than a per cent higher Monday following statements from German Chancellor Angela Merkel that Europe and the International Monetary Fund (IMF) could provide the cash-strapped country with some form of debt relief.

IMF head Christine Lagarde said in a statement on Friday that “it is equally critical for medium and long-term debt sustainability that Greece’s European partners make concrete commitments in the context of the first review of the European Stability Mechanism (ESM) program to provide significant debt relief, well beyond what has been considered so far”.

In July, the IMF warned Greece’s European creditors it would not be involved in the bailout program unless there is a debt relief agreement in place.

Lagarde’s statement came as Eurozone finance ministers agreed to the $94 billion bailout package on Friday.

But the package includes significant austerity measures such as slashing defense and agriculture subsidies, reforming the pensions regimen, increasing privatization, raising taxes, removing value-added-tax discounts, and increasing deregulation.

Greek Prime Minister Alexis Tsipras, who had been trying to push the bailout package through parliament, faced sharp rebuke from members of his own party last week; a third rejected the deal.

Even his former Finance Minister Yannis Varoufakis has been very critical of the bailout deal, shredding it online and in interviews.

In the end, Tsipras did manage to get parliament to ratify the bailout deal, but only by reaching out to the political opposition.

The near revolt among his own party could mean that there will be a no confidence vote soon, which could theoretically end in a new general election. This is a prospect that could not come at a worse time, analysts had earlier said.

Meanwhile, Merkel will face a tough question-and-answer session when she meets with parliamentarians on Tuesday. Parliament will then vote the next day on whether to ratify the bailout deal.

Greece is expected to repay an European Central Bank loan of $3.5 billion on Friday.

The BRICS Post with Agencies