German lawmakers to drop support for Greece bailout if IMF quits, senior MP says


German lawmakers will not back further financial support for Greece if the International Monetary Fund withdraws from Athens's bailout program, the deputy parliamentary floor leader of Chancellor Angela Merkel's conservative bloc said.

Greece needs a new tranche of financial aid under its third bailout program by July to meet its debt repayments.

But the IMF says Greece also needs substantial debt relief to make its public finances more sustainable, while Germany, one of Athens’s biggest creditors through the eurozone's rescue mechanism, opposes such a step.

Asked if there could be any scenario under which the German Bundestag, or lower house of parliament, would support the bailout without IMF participation, Hans-Peter Friedrich told Reuters in an interview on Tuesday:

"No chance. This was an explicit condition for the third bailout program."

"Without IMF participation, there won't be any further assistance loans. The IMF must stay on board," said Friedrich, a member of the Christian Social Union (CSU), the Bavarian sister party of Merkel's Christian Democratic Union (CDU).

Berlin has long argued that the IMF's expertise and independence are crucial to make Greece's third bailout, worth up to 86 billion euros ($91 billion), a success.

The Fund's continued involvement will be the main issue on the agenda on Wednesday when IMF Managing Director Christine Lagarde meets Merkel in Berlin.

Friedrich urged the Fund to show flexibility and to back off its demand for the euro zone to grant Greece some debt relief.

Earlier on Tuesday German Finance Minister Wolfgang Schaeuble accused Greece of using the debt issue as "an excuse" for not focusing on what he said should be Athens's top priority, implementation of reforms agreed with its lenders.

Germany is preparing for what is likely to be a close-run national election in September and a new parliamentary vote on Greece in the coming months could complicate Merkel's efforts to get re-elected.

But Friedrich said German elections should not prevent lawmakers from halting aid to Greece if the IMF decides against participating in the bailout program.

"Electoral reasons should not play a role when dealing with Greece. It's an international issue," he said. "After all, there is always an election somewhere in Europe."

Greece and its lenders agreed on Monday to resume talks on a bailout review, easing a standoff which had threatened to block the release of the next tranche of its bailout. [Reuters]