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Posted on: September 14th, 2012 by AlYunaniya Staff No Comments

IMF official: “Greece needs third bailout”

Screen Shot 2012-09-12 at 10.27.12 AM

photo: ND flickr

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Greece will need a third bailout package from the Eurozone, and the country’s European creditors will have to find the money for it, Thanos Catsambas, an IMF alternate executive director, who represents Greece at the Fund’s board told Wall Street Journal.

“Greece will require additional financing, which may take the form either of official-sector involvement or of additional loans, hopefully on more favorable terms,” Catsambas said, according to WSJ.

According to the paper, Samaras has asked his Eurozone partners for a two-year extension to meet budget deficit reduction targets, something that would create an extra EUR 20 billion funding gap for the period. The government has explored funding this with increased issuance of shorter-term treasury bills, thus avoiding direct extra financing from its creditors, but Catsambas said it would be “totally unrealistic” to assume that Greece could fill the gap entirely on its own.

Catsambas insisted that it should be the euro zone and ECB that take the strain of filling the rest of the gap. “Extension of repayment of the IMF [part of] loans is impossible as all terms and conditions of IMF loans to all countries are based on rules that are not negotiable,” he said. The failure of Greece to implement its agreements, and the lack of a sustainable debt trajectory, make it impossible for the IMF, under its own charter, to lend any more.

Catsambas said that the previous coalition government under Lucas Papademos, who took over from George Papandreou in November last year, estimated that “only 22% of the commitments under the troika-supported program were implemented” in 2011. Catsambas noted that the public sector still needs to be shrunk as a

Finance Minister Yannis Stournaras yesterday denied the WSJ report. “The country ́s positions are formulated by the Prime Minister and the Finance Minister,” Stournaras told Reuters


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