IMF deputy says Greece needs debt relief

Greece needs debt relief to aid the economy after agreeing to a range of austerity measures in exchange for a bailout, said Zhu Min, deputy managing director of the International Monetary Fund.

“The financing is clearly a very important issue for the Greek economy and the debt relief is also an important issue,” Zhu said in an interview on Tuesday in Ethiopia’s capital, Addis Ababa, where he is attending a development finance conference. “Given the debt ratio is way high, something we need to think of is a proper way to do the debt relief profile and debt restructuring to reduce the burdens and help the economy move forward.”

Greek Prime Minister Alexis Tsipras on Monday bowed to demands from European creditors in exchange for a bailout of as much as 86 billion euros ($95 billion) that will keep his nation in the eurozone.

While euro-area creditors have rejected any cut in the face value of Greek debt, they held out the prospect of interest-payment grace periods and longer maturities after a “successful evaluation” of the new aid program.

Greek government debt stood at 177 percent of gross domestic product at the end of last year.

Greece missed a further payment to the IMF on Monday, increasing arrears to the Washington-based lender to about 2 billion euros. Tsipras requested an extension on the loan repayments, which will be discussed at an IMF board meeting, Zhu said.

“Since they have arrears, of course we are not allowed to disburse the funds further,” he said. Once the arrears are cleared “we will be able to disburse the remaining funds in the program we negotiated three years ago,” he said.

[Bloomberg]