The IMF partnered the Eurozone nations in providing Greece with two substantial financial bailouts in order to keep the nation from falling into a sovereign default. In the event, Greece has needed a third bailout worth a further (maximum) of €86 billion, however, the IMF believed that Greek debt would be unsustainable without debt relief and has yet to agree to the third bailout.
It would be politically unacceptable within the Eurozone if Greek profligacy and economic mismanagement had to be subsidized by her EU partners in the form of debt forgiveness. The IMF believes that just such a move is needed if Greece is to stand on its own two feet economically speaking. However, the Eurozone has shown flexibility on debt repayment dates and the interest rates that the loans attract, in recent months.
It seems that common ground may have been found between the EU and IMF over continuing reforms that the Greeks will need to make to ensure the sustainability of their economy and be eligible for bailout funding, following on from a Eurozone finance ministers meeting on Monday. To this end, IMF and EU teams plan to return to Athens soon to iron out a deal on a package including reducing the income tax threshold and pension cuts which are contentious in Greece, of course, but are regarded as overly generous by some Eurozone members. The fact that the missions will go ahead has led to optimism that the IMF will agree to participate in the third bailout programme. Greece needs the additional funding if it is to meet a debt repayment of €7 billion in July. Germany has stated that it will not support the third bailout unless IMF involvement can be achieved. For its part, the IMF has said that it can only be involved if Eurozone members address its concerns that Greece will be unable to make a 3.5% primary surplus by 2018 (before deductions of interest and debt repayments).