Alexis Tsipras. Greek prime minister, addressing the nation, July 01,
Greece will require at least €60bn in new financial aid over the next three
years and debt relief to give it a chance at sustainability, the International
Monetary Fund warned on Thursday.
The IMF said in a report that Europe should
grant the country “comprehensive” debt relief, calling for the doubling of the
maturities on its debts from 20 to 40 years.
says: "There is a substantial weakening in the delivery of structural
reforms and in the reform commitments. This has made untenable the assumption
until the last review that Greece would go from having the lowest average TFP
growth in the euro area since it joined the EU in 1981 to having among the
highest TFP (total factor productivity growth), and that it would go to the
highest labor force participation rates and to German employment rates .
Thus, relative to the last review, staff has downgraded the real long-term
growth rate by 50 basis points to 1½%. (Growth in the 2- 3% range
is assumed over the next few years, as confidence returns and the output gap is
gradually closed.) Clearly, growth risks remain to the downside, which is
examined in the robustness scenarios...to ensure debt can be deemed sustainable
with high probability."
The Financial Times reports that with the expiry of the Eurozone’s bailout on
Tuesday this week, Greece would need a further €10bn for the next four months, a
senior IMF official said on Thursday. Moreover, there was a very real
possibility that they would rise further as a result of the deteriorating
“Clearly this is subject to very significant downside risks now,” a senior IMF
official said. “It is urgent that we get out of this current situation.”
Leading EU officials have cast Sunday's Greek referendum vote as being on the
future membership of the euro but the Greek government which is calling for a No
vote says it is on strengthening its hand on negotiating with the bailout
In a television interview broadcast Thursday night,
Alexis Tsipras, Greek prime minister, said voters should reject the
creditors’ demands and he stressed that the country would have a bailout deal
within 48 hours after the vote if they did.
“If ‘no’ wins, I can assure you that the next day I will be in Brussels and
there will be a deal,” he said.
Jeroen Dijsselbloem, the Dutch finance minister
who is president of the Eurogroup of Eurozone finance ministers, said a “No”
vote wouldn’t entail Greece automatically leaving the common currency. But he
stressed it would be an illusion for voters to believe that by voting “no,”
Greece would be in a position to negotiate a better bailout package.
The FT says that the governing council of the European Central Bank is "set
to reconvene on Monday and will almost certainly toughen the terms of emergency
loans to Greece’s largest lenders if Greeks vote no in Sunday’s referendum,
officials said. That could push one or more of the country’s biggest lenders
over the edge and hasten Greece’s exit from the currency union."