The International Monetary Fund will stop paying further rescue aid to Greece, making the country’s insolvency in September more likely, the Der Spiegel magazine said. citing unidentified European Union officials.
While a review of Greece’s progress in meeting terms of its rescue is unfinished, it is “already clear” to the reviewing body of the IMF, the EU Commission and the European Central Bank that Greece will not be able to fulfill its promise to cut debt to 120 percent of annual economic growth in euro terms by 2020, Der Spiegel said.
Missing the target means Greece needs between 10 billion euros and 50 billion euros ($60.8 billion) in additional aid, a potential outcome that the IMF and several unidentified euro-area states are not prepared to accept, the magazine said, citing the review.
Euro-area leaders regard Greece’s exit from the euro as manageable even though they want to prop up the country’s finances until the new and permanent rescue fund called the European Stability Mechanism is in operation, the magazine said, citing from the same sources. Germany is holding up the inception of the ESM as it awaits a court ruling on the fund’s constitutionality on Sept. 12, Spiegel said.
The ECB may step in to help Greece in the meantime, said the magazine, citing some 3.8 billion euros the government needs to pay back to the central bank on August 20. The government may sell debt of that amount as short-term “T-Bills” to Greek banks, which in turn would deposit the bonds as security at the ECB, securing further aid, Spiegel said.