Greece debt crisis Q&A: What next in the battle to secure a bailout?

A man walks by a mural in Athens on Tuesday (Reuters)

Q. What’s the IMF doing?

A. The Fund is demanding more forcefully than ever that the European creditors must grant Greece extensive debt relief. The IMF leaked its latest debt analysis to heap pressure on European politicians to face reality and act. The IMF believes Greece’s national debt pile is too large to be ever paid back.

Q. Should we care?

A. The IMF’s view matters. The job of its experts is to calculate whether debt levels are sustainable; it is owed money by Greece and is under pressure from its members (national governments) to get repaid; and Greece’s creditors want the IMF to contribute to a new €86bn bailout.

Q. What do creditors say?

A. Monday’s agreement already spelt out that creditors “stand ready to consider” debt relief. In theory they are already signed up for exactly what the IMF is pushing for. But the creditor powers have been adamant that Greece can only receive debt relief after it has reformed its economy and cut back state spending. The IMF is now making it clear that it wants the issue of debt relief to be dealt with now, not later.

Q. Will this force a Grexit?

A. Not necessarily. The immediate priority for Greece is to secure a €12bn bridging loan to see it through the next three months and to prevent it defaulting on a bond repayment to the European Central Bank. Then the ferocious negotiations over the terms of the €86bn bailout and debt relief will begin.