IMF official says vital loan slice for Greece hangs on EU

ATHENS: European leaders must take tough decisions on Greece at a June summit before the IMF will disburse its share of a vital rescue loan, a senior IMF official said on Tuesday.

"I believe there is a summit in Europe by heads of state (in June) where some hard nuts need to be cracked and they need to make some decisions," Bob Traa, the IMF's senior resident representative for Greece, told a conference in Athens.

"And then actually we will be ready to go to our board and to disburse in early July because we know time is of the essence," Traa said.

The IMF official was referring to a loan instalment of 12 billion euros ($18 billion) out of an overall 110-billion-euro rescue package set aside for debt-hit Greece last year by the International Monetary Fund and the European Union.

Athens urgently needs the money to pay next month's bills.

It looks increasingly likely to need more loans when that rescue package expires in 2013, but the IMF has threatened to withhold its share of the funding without new measures and support decisions to make Greece's huge debt sustainable.

The Greek debt has exploded to over 350 billion euros and most analysts agree that a damaging restructuring in some form to enable the country to maintain its repayments cannot be avoided for long.

European leaders are to meet in late June to discuss Greece's ongoing economic difficulties, and there are reports that an additional two-year rescue package of around 70 billion euros will be debated.

Copyright AFP (Agence France-Presse), 2011