IMF staff warned that uncertainty about a new bailout for Greece may undermine confidence in Germany and delay a pickup in investment that was expected to drive the recovery of Europe’s biggest economy.
“The risk of renewed stress in the euro area has increased” since a bailout for Greece funded by euro-member states expired June 30, according to an International Monetary Fund statement to the fund’s executive board. The statement is part of an IMF assessment of Germany’s economy released Wednesday.
European leaders agreed this week to a new bailout of as much as 86 billion euros ($94 billion) for Greece, which is buckling under the strain of a cash-starved banking system. The plan faces several hurdles, including passage in the Greek parliament of reforms demanded by European creditors.