(Greece) – The International Monetary Fund, or IMF, says that Greece will need debt relief until 2040 in order for the nation to experience future economic growth. Officials at the IMF are calling for creditors to ease up on requiring Greece to pay the interest and principal on its bailout loans until 2040. The organization believes that this moratorium will help heal Greece’s struggling economy.
In a recent proposal that was released last week, the IMF said that they believe Greece should begin to make these payments starting in 2040 and will be spread out over a period of forty years, with the last repayment occurring in 2080. The proposed interest rate for the loans in this plan is set at 1.5%.
The plan has been criticized for being too “hardcore” but the IMF believes that they are acting in the best interests of the Greek economy. They’ve long criticized the EU’s harsh stance, saying that there is little room for economic growth within the current plan. The ultimate goal of the plan is to keep the annual debt-service to below 15% of its gross domestic product, which is what they believe will help encourage a positive long-term outlook for the economy. Currently, their debt exceeds 200 billion Euros and now that the third wave of bailout funds has been approved, the number will increase.
The IMF has long believed that the current Greek debt is unsustainable, which is the main reason why they won’t add any funds to the bailout program. Despite this, these suggestions aren’t expected to be embraced by the Eurozone leaders, especially those in Germany. The IMF and Germany have long disagreed on the best way to handle the Greek economic crisis. Germany, however, is currently the biggest lender to Greece’s many loans. Germany has also called for the IMF to participate financially in the bailouts, which they’ve agreed to do as long as its conditions are met.