By Sotiris Nikas

Greece runs a direct risk of default if it fails to implement the package of measures -- the so-called “memorandum” -- agreed with international creditors to accompany the second bailout loan, the International Monetary Fund (IMF) said in its report, released on Friday.

The report contains a preliminary list of additional cuts in social spending and closures of public departments that must be decided by June, for savings of 11 billion euros in the period 2013-2014. Of these, 4.2 billion will come from cuts in social welfare benefits, 4.2 billion from cuts in pensions and 2.1 billion from a restructuring of public administration.

Together with better tax collection, the adjustment is estimated at 14 billion euros (7 percent of GDP). The government has already promised to lay off 15,000 public sector employees this year.

The IMF warned that the coming elections pose a risk for the implementation of the memorandum, even though the two parties in the current coalition have pledged to abide by it. Any delays will lead to a deeper recession and an increase in debt, the IMF said.

“The realization of these risks will most likely require the participation of the official sector in a debt haircut, and this will lead to state default,” the report says, adding that a termination of the support of the official sector will lead to a disorderly default.

Nevertheless, the IMF argues that the new program has been so planned as to minimize such risks, and reminds that eurozone members have committed to providing long-term support to Greece.