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IMF warns no Greek deal without a ‘credible strategy on debt sustainability’

The International Monetary Fund’s discussions on Greece’s debt are ongoing and no deal has been reached, IMF spokesman William Murray said on Thursday. At the same time, Murray warned that there will be no Greek deal without a credible strategy on the Greek debt and that the Fund will not give another loan to Greece without a debt agreement.

On Wednesday Slovakia’s finance minister, Peter Kazimir, said the IMF was likely to take part in the financing of Greece’s third bailout. Greece agreed earlier this month on further spending cuts to qualify for funding. In return, it wants measures to ease the strain of its debt, which now stands at 179 percent of gross domestic product.

“Discussions on the debt side of the equation have only just started, so it’s really early,” Murray told a regular news briefing. “Our position hasn’t changed.”

The IMF backs debt relief and is reluctant to take part in the financing of Greece’s bailout without agreement on a debt burden it views as unsustainable. Murray added that while the IMF welcomed progress on the economic policy package, it would have to go hand in hand with a credible strategy on debt.

He also said that no deal had been reached on Greece’s primary surplus. The lenders want Greece to maintain a 3.5 percent of GDP primary surplus for up to four years, according to draft documents seen by Reuters.

“We’re still in discussions on that and of course the debt discussions affect the primary surplus over the horizon, so until these things fall into place, I can’t really comment,” he said. There would likely be further discussions on Greece at the G7 meeting of finance officials and central bank governors this week in Bari, Italy, despite it not being on the official agenda, Murray said.

Note: Slovakia’s Peter kazimir is a Schaeuble follower and supporter.

PS The IMF insists, the German finance minister insists… they all insist and there is no way out.

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