Greece’s ballooning debt load is casting doubt over the International Monetary Fund’s role in future bailouts. The IMF typically needs debt to be sustainable to provide more funds and, with the economy faltering, Greece is heading in the wrong direction.
The European Commission forecast last week that the country’s debt will be 174 percent of gross domestic product next year, 15 percentage points above the level projected in February. And even that assumes Prime Minister Alexis Tsipras reaches a deal to get previously agreed aid flowing.
The projection means that if there’s an agreement, the Greek leader is still going to hit bureaucratic and political resistance to longer-term support. While the euro area has denied debt relief to Greece and insisted Tsipras observe the terms of the existing bailout, the IMF has signaled its concern over the deterioration in the country’s finances.