World Economy

Greece Requests Fresh IMF Loan

Greece Requests Fresh IMF LoanGreece Requests Fresh IMF Loan

Greece has formally requested a fresh loan from the International Monetary Fund, edging closer to a huge third international bailout.

Athens is seeking a three-year bailout worth €86 billion ($94.4 billion) to avert financial collapse and a eurozone exit, but it had originally planned to go without fresh help from the IMF as it considers the global agency too intrinsically linked with austerity measures, Breaking News reported.

However, in a letter to IMF Managing Director Christine Lagarde, Greek Finance Minister Euclid Tsakalotos noted that the Greek Parliament has passed two laws enshrining a series of harsh austerity reforms including tax rises and an overhaul of the pension system.

“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,” Tsakalotos wrote.

“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.”

The letter was dated 23 July but released to the public on Friday.

The IMF confirmed receipt of the loan request and said that it will now discuss with Greek and EU authorities “the timing and the modalities” of talks on the next bailout.

 Gesture of Goodwill

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

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

Tsakalatos’ request came amid an apparent delay in getting the ball rolling on talks to finalize the bailout package. Negotiators from the creditors, known collectively as the troika, have not set foot in Athens for over a year as hostility has increased between the two sides.

 Talks in Coming Days

Greece said on Thursday that the creditors would fly in to Athens on Friday to begin the negotiations, but a European Commission spokesperson said that they will do so “in the coming days”, 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.

Greece and its creditors are under huge pressure to hammer out the bailout deal before August 20, when Athens is scheduled to make a massive €3.2 billion loan repayment to the ECB that it cannot currently afford.