Anger in eurozone over IMF warning on Greek debt crisis

THE GREEK debt crisis is on the verge of spiralling out of control once again, amid an escalating battle between officials over how to fix the country’s fragile economy.

Tensions surrounding the colossal bailout package were laid bare yesterday after the International Monetary Fund warned that Greece’s finances are treading an ‘explosive’ path.

In a warning that will increase fears over the future of the eurozone, the Washington-based body demanded that the EU agrees to pay even more money towards Greece’s huge debts. It added that if new measures are not put in place, Greece’s debts would stand at a staggering 275 per cent of GDP by 2060

The grim assessment has intensified a long-running feud over the rescue package between the IMF and Brussels, with EU officials reluctant to pump more funds into the ailing country ahead of elections across the continent this year.

Officials in Greece reacted furiously to the fund’s downbeat intervention, accusing it of being ‘misleading’ over the country’s economic health.

Finance minister Euclid Tsakalotos said the IMF report, which branded the current rescue plan ‘highly unsustainable’, was overly pessimistic. The head of the eurozone’s finance ministers, Jeroen Dijsselbloem, also accused the IMF of adopting an ‘outdated’ view, describing Greece’s performance as pretty good.

Greece’s current batch of financial aid is due to run out in July. It will then require £5.9billion to pay off its creditors.

Despite pledging its support to a third international bailout in 2015, the IMF has yet to officially sanction any funds as part of the £73billion package.

EU officials are desperate to agree a deal in the coming weeks that will guarantee the IMF’s involvement – without which the package risks collapsing. It is hoped an agreement will be finalised later this month.

In its analysis, the IMF said Greece was in need of ‘substantial debt relief from its European partners to restore debt sustainability’.

It also called for austerity measures to kick in if Greece misses its targets, which are being strongly contested by the ruling Syriza party.