Merkel expects IMF to join bailout for Greece

ATHENS • Prime Minister Alexis Tsipras has economists on his side, with many backing recent calls by International Monetary Fund (IMF) chief Christine Lagarde to ease Greece's crippling debt.

German Chancellor Angela Merkel, too, seemed to echo the sentiment, saying over the weekend that "there is leeway on the extension of maturities, on interest rates".  

A survey of 42 European economists found 90 per cent of the respondents expect Greece to remain a euro member state through the end of 2016.

That signals that the third bailout package, which includes an €86 billion (S$134 billion) loan programme approved by the Greek Parliament  and euro zone finance ministers last week, has successfully defused the threat of a so-called Grexit, at least among economists. 

Greece needs funds from the new bailout by Thursday to avoid defaulting on a €3.2 billion payment to the European Central Bank.

Approval by Germany's Parliament, where dissent is brewing against the bailout, is needed to unlock the funds, and a vote by lawmakers is scheduled tomorrow, one day before the deadline.

Dr Merkel expressed confidence that the IMF will join Greece's third bailout signalling willingness to consider debt relief to help make it happen. IMF's Ms Lagarde made it clear she will back the fund's participation starting in October if conditions including eased terms on previous Greek aid loans are met.

Getting some leeway on Greece's debt is one of Mr Tsipras' main goals as he looks for ways to help stabilise the nation's public finances. But the Greek government appears likely to call a confidence vote following a rebellion among lawmakers from the ruling Syriza party over the new bailout deal, senior ministers said yesterday.

Energy Minister Panos Skourletis has described such a parliamentary vote as "self-evident" following last Friday's rebellion when almost a third of Syriza deputies abstained or voted against the agreement.

Greece's political turmoil has raised uncertainty over how the government will implement the deal, which demands deep economic reform and tough austerity policies, without a workable majority.


A version of this article appeared in the print edition of The Straits Times on August 18, 2015, with the headline 'Merkel expects IMF to join bailout for Greece'. Print Edition | Subscribe