As U.S. Treasury Secretary Jack Lew jets into Europe to urge policymakers to keep the Greek rescue on track, there are fears that the International Monetary Fund has derailed country’s third bailout.
Lew is expected to visit Frankfurt, Berlin and Paris over the next two days for talks on Greece with senior financial officials, including the President of the European Central Bank Mario Draghi and finance ministers of France and Germany.
His trip comes at a crucial moment in the Greek crisis, with the country’s parliament due to vote later Wednesday on wide-reaching reforms and spending cuts.
Meanwhile, the International Monetary Fund (IMF) stirred already tense relations between Greece and its creditors, which had just agreed to open talks on a 86 billion euros bailout, by saying on Tuesday that Greek debt relief was essential.
The IMF study, first reported by Reuters, showed that while Greece has to stick to the reform program, it still needed far more debt relief than European governments were willing to consider.
The IMF study was used as part of the weekend’s negotiations with the Eurogroup of euro zone finance ministers and leaders.
According to the news agency, European countries would have to give Greece a 30-year grace period on servicing all its European debt, including new loans, and a dramatic maturity extension. Otherwise, Europe had to accept “deep upfront haircuts” on existing loans.
It’s not the first time the IMF has called for debt relief over Greece, somewhat ironically, given that Greece missed a 1.6 billion euro loan repayment to the Fund last month and another 456 million euros due earlier this week.