Financial deal of Greece and EU is impracticable: IMF

YEREVAN, JULY 15, ARMENPRESS: The International Monetary Fund (IMF) has fiercely criticized the bailout deal offered to Greece by the eurozone, Armenpress reports, citing BBC. It said Greece's public debt was now "highly unsustainable" and urged debt relief on a scale "well beyond what has been under consideration to date".

Late on Tuesday, the IMF made public advice it had given to the Eurogroup of finance ministers at the weekend.

That adviceincluded proposals that would see some of Greece's enormous debt written off.

The IMF study said European Union countries would have to give Greece 30-years to repay all its European debt, including new loans, and a dramatic extension on the maturity of its debts. Without such extensions creditors might have to accept "deep upfront haircuts" on existing loans, the IMF added.

The split between the IMF and Greece's European creditors over how best to deal with the country's debt crisis has been hinted at before, but this is the first time such a disagreement has been made public.

One senior IMF official said the fund would only participate in a third bailout for Greece if EU creditors produce "a clear plan".

The current deal "is by no means a comprehensive, detailed agreement", the official said.

BBC Europe correspondent Chris Morris says the IMF's report was written before the eurozone reached a deal with Greece in the early hours of Monday morning.

Our correspondent adds that its contents were shared with eurozone leaders in advance, so they already knew how unhappy the IMF was when they did the deal.

Under the new bailout terms, eurozone governments will contribute between €40bn and €50bn to Greece's new three-year bailout, the IMF is expected to contribute another major chunk and the rest will come from selling off state assets and the financial markets.

The split between the IMF and the EU comes just hours before the Greek parliament is due to vote on a raft of economic reforms demanded of the Eurogroup over the weekend as a condition of a third Greek bailout.

The measures - which face resistance from Prime Minister Alexis Tsipras' own MPs - include taxation increases and pension curbs.

Greece owes about 10% of its debt to the IMF.

It hasmissed two deadlinesfor repayment to the fund and is the first EU country ever to do so.

TheIMF also saidit regarded forecast rates of growth for Greece as unrealistically high.

Its analysis, released on Tuesday night, pointed to Greek government debt reaching a peak of close to 200% of GDP or national income - over the next two years, which it called "highly unsustainable".

The BBC's economics editor says the IMF's assessment makes it much harder for Mr Tsipras to persuade the Athens parliament to back the measures needed in Wednesday's votes.

It brings into question the validity of the reform measures demanded by the eurozone and endorses the kind of debt write-offs the Greek public have been arguing for, he adds.

On Tuesday, Mr Tsipras said in an interview on state television that he did not believe in the bailout offered but was willing to implement it to "avoid disaster for the country" and the collapse of the banks.

The conditional agreement to receive up to €86bn (£61bn; $95bn) from the EU over three years depends on further economic reforms - including the labour markets, banks and privatisation - being passed after Wednesday.

Hard-liners in Mr Tsipras' own Syriza party are likely to rebel and the junior coalition party, the Independent Greeks, have offered only limited support for the reforms.

Meanwhile, unions and trade associations representing those including civil servants, municipal workers and pharmacy owners have called or extended strikes to coincide with Wednesday's parliamentary votes.

Greece also faces an immediate cash crisis. Banks have been shut since 29 June.

Mr Tsipras warned banks are unlikely to reopen until the bailout deal is ratified, and this could take another month.

A suggestion of providing Greece with emergency funding under the EU-wide European Financial Stability Mechanismhas been opposed by Britain, which is not part of the euro but is an European Union member.