IMF cautions Greece on early withdrawal from program

The IMF said Thursday that Greece is not ready to rely solely on commercial markets for financing, after Prime Minister Antonis Samaras said the country might exit its bailout early.

With more than one year left in its rescue loan program for the country, the International Monetary Fund said Athens should still draw on it for support.

“Greece has made important progress… but as recent events have shown theres still a way to go before Greece can rely entirely on markets for financing,” said IMF spokesman Gerry Rice.

He said the sixth review was ongoing in the Fund’s four-year loan program for Greece, with some $16 billion still to be disbursed.

“At this stage, were looking forward to receiving from the authorities the full set of policy proposals that could serve as the basis for the discussions,” he said.

Earlier this month Samaras sparked concerns in financial markets when he said Greece wants to end the IMF program by the end of December, a year ahead of schedule.

After years of bowing under the tough austerity policies dictated by its bailout lenders, analysts said forfeiting $16 billion in aid is likely a move by Samaras to curry favor ahead of elections.

But the country’s vulnerability showed in the gyrations of global markets two weeks ago, when the yield on Greek 10-year debt soared above 8.6 percent and Greek stocks plummeted.

Rice said the Fund was sympathetic to Athens’s desire to avoid more sweeping cuts to wages and pensions as a way of balancing its budget.

“That’s why it is important to press ahead with the structural reforms… to strengthen in particular the tax administration where progress we feel continues to lag.”

He said the IMF was ready to support any changes in its relationship with Greece, and said the Fund thought it better that Athens continues at least with some kind of precautionary support program. [AFP]

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