According to several web sources, the IMF cannot participate in further financial support of Greece at this point since Greece has failed to comply with all the necessary requirements making it possible to access new loans.
They say this decision came as the result of the latest IMF meeting conducted on July 29th. The report following the meeting says that Greece has an exceptionally high level of debt and the Greek authorities have failed to conduct all the reforms promised several years ago in exchange for financial support.
The document says that the IMF will still be participating in the Greek debt talks along with the ECB and the EU and will suspend its participation in the financing of Greece in several months or maybe even next year.
This suspension is expected to take place at the “second stage”, which is expected to start instantly after Greece has approved the massive package of reforms they promised to conduct in exchange for more loans and the European lenders have approved these loans.
During the IMF meeting, the German representatives said that Germany would like the IMF to make its decision simultaneously with the Eurozone. Otherwise, it would be difficult to get an approval from the Bundestag to start offering Greece more loans.
Last week, the IMF suspended its financial aid to Greece since the IMF members arrived at a conclusion that the IMF alone wouldn’t be able to help Greece go back to the credit market. As a result, the Greek government official asked the IMF for new loans. Basically, that’s the key reason why the IMF conducted the latest emergency meeting.
The IMF’s decision to suspend the financial aid to Greece was made despite the fact that Christine Lagarde, which is the Managing Director of the IMF, was against it. The thing is that at leas several major members of the IMF voted against further financial aid to Greece, including some Asian members, Canada and Brazil. The Eurozone and IMF nations seem to be at odds over the Greek problem.
In mid July, Greece and the EU reached a preliminary agreement on a new package of loans estimated at 86 billion EUR. In order to start a new round of talks, Greece should have adopted a series of new austerity laws. The lenders are planning to decide on the new loans by August 6th. It should be noted that Athens will have to pay the ECB 3,2 billion EUR by August 20th. In the mean time, EURUSD is testing a preliminary level of support located at 1.1020.
