WASHINGTON (Sputnik) — The head of the International Monetary Fund (IMF) welcomed the Eurogroup's decision to provide Greece with a new financial assistance package, but insisted that additional relief is necessary to ensure the country's medium and long-term debt sustainability.
"The policy package specified in the Memorandum of Understanding (MoU) recently agreed between the Greek authorities and European institutions, with input from Fund staff, is a very important step forward," IMF Managing Director Christine Lagarde said in a Friday statement after a Eurogroup meeting that approved an €86 billion ($93 billion) bailout package aimed at rebuilding Greece's ailing economy.
"It [new package of measures] not only reverses much of the policy backtracking that caused the previous program to run seriously off track, but puts in place wide-ranging policies to restore fiscal sustainability, financial sector stability, and a return to sustainable growth," Lagarde said.
The IMF chief stressed, however, that policy reforms alone cannot restore Greece to full financial stability.
"However, I remain firmly of the view that Greece’s debt has become unsustainable and that Greece cannot restore debt sustainability solely through actions on its own. Thus, it is equally critical for medium and long-term debt sustainability that Greece’s European partners make concrete commitments in the context of the first review of the ESM program to provide significant debt relief, well beyond what has been considered so far," Lagarde explained.
On July 13, eurozone leaders agreed on a new bailout plan for Athens that would guarantee the country some $93 billion over the next three years in exchange for strict austerity measures.
Shortly after reaching the agreement, Athens and its lenders from eurozone countries, the European Central Bank (ECB) and the International Monetary Fund (IMF) launched negotiations on the third aid package.
Under the new package, Greece will receive the first tranche of 26 billion euros in two payments. The first sub-tranche of 10 billion will be made available immediately, while the second sub-tranche of €16 billion will be disbursed to Greece in several instalments, starting with a first disbursement of €13 billion by August 20.
On August 20, Greece is due to make a €3.4 billion ($3.8 billion) repayment to the ECB.