Greek referendum puts IMF loan in jeopardy: officials

2nd November 2011, Comments 0 comments

Greece's plans to hold a referendum on its latest bailout deal has effectively put on hold the disbursement of loans it needs to avoid defaulting within weeks, European officials said Wednesday.

"It is difficult to envisage in the current situation the disbursement of the sixth (aid) tranche under the agreed terms," a senior European official said, speaking on condition of anonymity as G20 leaders have yet to meet.

The EU has given a preliminary green light to granting the eight billion euros in loans under Greece's 110-billion-euro rescue programme, agreed in May 2010m, but the International Monetary Fund's board still has to decide.

"Without a clear signal from the Greeks about the direction in which they plan to go, it is difficult to envisage a disbursement," the official said.

Another official said a decision could be taken by eurozone finance ministers when they meet on Monday.

"That is what is being talked about today," he said in Cannes, where top European leaders plan to take Greek Prime Minister George Papandreou to task over the referendum, which up-ended a plan to contain the eurozone debt crisis.

The Monday talks will seek "a practical way forward," he said.

The IMF could also decide that the loan conditions have not been met given the possibility of a rejection of the latest bailout plan in the referendum.

The IMF's rules prohibit lending to a country if there are not measures in place ensuring its medium-term solvency.

"One can raise the question" about the disbursement of the sixth loan installment, another official said, adding: "Everything is in suspense."

© 2011 AFP

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