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IMF 'may delay Greek bailout loans' over political opposition to cutbacks

The Greek opposition have refused to sanction new austerity moves – and now the IMF is threatening to hold up on payments.

Eurogroup president Jean-Claude Juncker says the refusal of Greek opposition parties to support budget cuts may mean a delay to its IMF loans.
Eurogroup president Jean-Claude Juncker says the refusal of Greek opposition parties to support budget cuts may mean a delay to its IMF loans.
Image: Virginia Mayo/AP

THE IMF MAY withhold its next tranche of bailout loans to Greece amid ongoing political turmoil in the country – potentially raising the prospect of Greece having to default on its loans.

The Eurogroup’s president, Luxembourg prime minister Jean-Claude Juncker, said this afternoon that the IMF might not proceed with the scheduled €12bn loan payment next month – on the back of statements by Greece’s opposition parties refusing to support the latest round of government spending cutbacks.

The IMF had previously said that while cross-party support for its moves was not a prerequisite for its loans, it would be welcomed – but the apparent decision of opposition parties not to support the latest austerity measures may now lead to a reexamination.

Juncker said the IMF could only be active “when there is a refinancing guarantee for 12 months” – a guarantee the ‘troika’ would probably find was no longer in place.

“If the Europeans have to realise that the disbursement of the IMF before June 29 can’t operatively happen, the expectation of the IMF is then that the Europeans will take the place of the IMF,” the Wall Street Journal quotes Juncker as saying.

But, Reuters adds, the European Union would not be able to step in and cover the shortfall – because such a move would be tantamount to amending the current terms of the bailout deal.

Doing so would require parliamentary approval in Germany, the Netherlands and Finland among others. None of those countries were likely to support such a deal, Juncker said.

The value of the euro slipped on the news, though the value of Greek 10-year government bonds fell over the course of the day – albeit remaining well above a mammoth 16 per cent.

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Gavan Reilly

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