Greece to avoid funding problems if it delivers on bailout program: IMF

Thu Jun 20, 2013 6:32pm EDT

WASHINGTON (Reuters) – The International Monetary Fund on Thursday urged Greece to speedily deliver on its bailout program, adding that doing so would ensure the country encounters “no financing problems.”

There is an ongoing review of the Greek bailout program, the IMF said on Thursday.

“If the review is concluded by the end of July, as expected, no financing problems will arise because the program is financed till end-July 2014,” IMF spokesman Gerry Rice said in a brief statement.

The Financial Times reported on Thursday the IMF might suspend aid to Greece next month unless euro zone leaders plugged a funding gap in the Greek rescue program.

Reuters reported on Wednesday that European foot-dragging could leave Greece some 2 billion euros ($2.7 billion) short this year as some euro zone creditors were reluctant to roll over their Greek debt holdings.

Greece’s creditors – euro zone countries, the European Central Bank and the International Monetary Fund – agreed last December that the bloc’s 17 national central banks would replace some of the Greek bonds they hold with new Greek paper as the debt matures.

This measure, called the “rollover of ANFA holdings”, was expected to spare Greece from having to redeem 3.7 billion euros of debt in 2013-2014 and 1.9 billion euros in 2015-2016.

But the bond rollover has hit a snag because some central bankers are worried that it might be seen as direct financing of the Greek government, Greek officials told Reuters. The law governing the ECB forbids it from such direct financing.

The Financial Times, quoting an unnamed source who it said was involved in the discussions, said the IMF had warned EU officials that the financing gap would require it to stop aid payments at the end of July.

“There is an ongoing review of the Greek program; the mission that concluded yesterday has made important progress; policy discussions have paused and are expected to resume by the end of the month,” Rice said, responding to press enquiries.

(Reporting by Alister Bull; Editing by Carol Bishopric)

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