The International Monetary Fund finds the Greek debt unsustainable and called on Eurozone leaders to write off part of it. Greece owes almost 10 percent of its debt to the IMF and Germany has insisted that the fund remains in the country’s third bailout plan. According to the Daily Telegraph, there is a leaked IMF memo to Eurozone leaders warning that Greece’s debt is unsustainable and Germany and other member countries should write off part of it. It also sounds as a warning that the IMF might withdraw from the plan if there is no debt haircut. So far, Eurozone lenders have denied to offer Greece debt relief. The IMF report said growth forecasts for Greece were improbable, expecting it to run an unrealistic primary budget surplus and that there were effectively no plans to address “root” problems of its banking system. The IMF also predicted the stricken economy’s debt would hit 200 percent of GDP, having said less than three weeks ago, before banks were shut and capital controls introduced, it had already peaked at 177 percent last year. “The dramatic deterioration in debt sustainability points to the need for debt relief on a scale that would need to go well beyond what has been under consideration to date,” the report said. The Financial Times says that if the IMF walks out of Greece’s bailout it could cause “significant political and financial problems for Berlin and other Eurozone creditors.” Greece has been insisting all along that the debt is not sustainable and now the IMF report supports that view. This may make it even harder for Prime Minister Alexis Tsipras to convince the Greek Parliament to vote in favor of a bailout program that doesn’t include debt relief but requires several painful reforms, says a Daily Telegraph report.
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