* EU and IMF at odds on Greek debt sustainability
* IMF wants to wait until after Oct. 23 summit to assess
* Private sector may have to make deeper contribution
BRUSSELS, Oct 20 The International Monetary Fund
disagrees with EU projections on Greece's debt sustainability
and wants to wait until a clearer outlook emerges before signing
off on the next tranche of financial support to Athens, EU
officials said on Thursday.
The IMF, which together with the European Commission and the
European Central Bank comprises the 'troika' of inspectors in
Greece, believes the EU's debt projections are too optimistic
and wants to wait until after a euro zone summit on Sunday to
see if discussions there produce a clearer picture on how the
debt levels can be made more sustainable.
"The IMF thinks that estimates by other parts of the troika
are over-optimistic," one source said, while another added: "The
IMF will definitely want to see what the Eurogroup and the
European Council come up with first," referring to this
The IMF was not immediately available to comment.
The troika was expected to publish its latest report on
Greece on Oct. 24, despite pressure to release it before the
Oct. 23 summit. The report is expected to indicate whether
Greece is doing enough to cut its budget deficit to justify
receiving the next, 8 billion euro installment of aid.
If Sunday's summit agrees on a deeper involvement by the
private sector in helping reduce Greece's debt burden, that may
make the debt stock, which stands at around 360 billion euros,
more sustainable and allow the IMF to sign off on the release of
the next tranche, possibly in November, the sources said.
The IMF has said in the past that it needs to be confident
in Greece's medium-term financing -- at least a year out --
before it can sign off on further aid to the country. Holding
off on approval is a way of applying pressure on Athens.
In May last year, the EU and IMF agreed to disburse 110
billion euros of loans to Greece, five installments of which
have been paid. If the next tranche is not released by the end
of the year, Greece could default on its debts.
Some euro zone countries are pushing for the private sector
to play a much more significant role in reducing Greece's debt
burden by taking a larger writedown on their holdings of Greek
On July 21, the private sector agreed on a voluntary basis
to take around a 21 percent "haircut" on its Greek debt
holdings, helping reduce the debt burden by around 50 billion
euros between now and 2014.
However, that is now deemed insufficient by some countries
and there is a push to sharply increase the private sector's
contribution, even if it is not done voluntarily.
If that were to happen, it would likely reduce the debt pile
more aggressively, putting Greek debt on a more sustainable
footing and in turn allowing the IMF to sign off on the next aid