Greece: IMF refuses to sign off on bail out deal amid SYRIZA divisions

July 31, 2015
Alexis Tsipras says a 'grexit' remains possible as the IMF refuses to sign off on the deal Greece signed with European creditors

The International Monetary Fund (IMF) has decided not to sign off on the European Union's bailout deal with Greece, saying it does not specifically address tackling Greece's debt, TeleSUR English said on July 30.

In a meeting on July 29, the IMF board members said they “cannot reach staff level agreement at this stage” over whether to support Greece's bailout package, according to the Financial Times who received the confidential meeting minutes.

Rather, the IMF said they can only come to such a decision after Greece has “agreed on a comprehensive set of reforms” and, crucially, creditors have “agreed on debt relief,” the FT said.

This could mean that the international lending body will not decide on whether to agree to a new lending program for Greece for months, or even until the next year. So far, Berlin and other European creditors have refused to grant Greece debt relief, which may prolong IMF's lack of support for the deal.

However, there remain other sticking points to the current deal. Under IMF bailout criteria, the recipient must be able to prove it has the “institutional and political capacity” to implement the required economic reforms.

It must also show “there is a high probability that the member's public debt is sustainable in the medium term”.

Under the terms of the EU bailout package however, IMF board members have deemed that neither criteria have been met, the FT said.

The IMF is not the first to disagree with the terms of Greece's latest bailout deal. Greek Prime Minister Alexis Tsipras is facing a wave of internal criticism from within the governing SYRIZA party for agreeing to the bailout package, which involves Greece agreeing to impose new austerity measures.

Even some members of the European Union have voiced scepticism over the deal. This includes Germany whose finance minister, Wolfgang Schaeuble, who proposed a temporary Greek exit (“Grexit”) from the eurozone rather than another bailout.

Tsipras says an exit from the eurozone is still possible, despite speculations that the idea had been quashed when the the SYRIZA governent accepted Europe's bailout terms.

Tsipras made the remarks and reiterated his call for debt relief in an interview with Greek radio Sto Kokkino FM on July 29.

“Grexit is still on the table until a debt forgiveness comes,” said Tsipras. “Our mandate was to stop the people's bleeding. I never said memoranda can be torn with just one law.”

Tsipras admitted that the terms of the bailout package were not ideal and told audiences that negotiations are not over.

SYRIZA, elected in January on an anti-austerity platform, has been split since Tsipras accepted the controversial bailout package on July 13 that would force Greece to adopt savage austerity measures or face a forced Grexit. In response, Tsipras called for a SYRIZA emergency congress next month in order to overcome the big divisions, TeleSUR English reported on July 30.

He added that if members wanted a faster solution, a snap party referendum could also be organised.

“I propose to the central committee to hold an emergency congress to discuss being in power as leftists, our strategy in the face of bailout conditions,” Tsipras told the 200-strong SYRIZA central committee

“There is another view, which is respected, that doesn't accept the government's analysis and believes there was an alternative available in the early morning hours of July 13. If this is the case … then I suggest the party hold a referendum on this crucial question.”

Panagiotis Lafazanis, a leader of the Left Platform that opposes the deal, replied, “How many referenda do we need?” in referrence to the July 5 referendum in which Greek voters rejected creditor demands. reported that Lafazanis said that under the deal, “Democracy is finished. The system of government in the country is the dictatorship of the euro.”

At the same time, Greek Parliament President Zoe Konstantopoulou — who also opposes the signing of the third bailout deal — said that “SYRIZA did not get a people’s mandate to shackle the country with a bailout memorandum.”

During the session, 17 members of the Central Committee resigned, claiming ideological differences with current party policy.

Earlier this month, more than 30 SYRIZA parliamentarians refused to vote for the reforms the EU is stipulating for Greece to receive its latest batch of financial aid – worth US$94 billion. The dissidents accused the party of betraying its anti-austerity roots.

Tsipras himself has spoken out against the austerity terms within the bailout package, but defended the deal as the lesser evil to being forced the country out of the eurozone “without any possibility of economic support, and without foreign exchange reserves”. He said this would have “forced Greece into devaluation and returning to the International Monetary Fund for support”.

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