US & IMF call for Greek debt relief, warn of global economic damage if ‘Grexit’

The US and the IMF have both called on European leaders to grant Greece debt relief, to prevent ‘Grexit’ from the eurozone. Athens is presenting a new reform plan on July 9 which is vital for an agreement with its creditors.

“Greece is in a situation of acute crisis, which needs to be addressed seriously and promptly,” the International Monetary Fund chief Christine Lagarde said in Washington Wednesday. Reforms by Athens and “debt restructuring” would help it to get out of the crisis, she added.

READ MORE: Greece asks for new 3yr loan, promises reform plan on July 9

US Treasury Secretary Jack Lew also called the sides to compromise, warning of hundreds of billions of dollars in economic damage around the world otherwise.

“In the next few days what we’ll see is [whether] the parties come together and build enough trust that Greece will take the actions that it needs to take so that Europe will restructure the debt in a way that is more sustainable,” Lew said.

He argued debt relief was necessary for Greece’s deal with creditors, describing ‘Grexit’ as a “geopolitical mistake”.

Speaking about better repayment terms for Greece Lagarde claimed the IMF “analysis has not changed”.

READ MORE: IMF says Greece needs third bailout of €60bn, debt relief

On Wednesday, Athens officially asked for a three-year loan from the European Stability Mechanism (ESM) and agreed to quick reforms, promising to present a new plan on July 9.

Speaking at the European Parliament in Strasbourg this week, Greek Prime Minister Alexis Tsipras said his country wants an agreement but not clashes with Europe. He added that the Greek referendum showed there’s a need to find a decision, without repeating the past mistakes that led to the crisis.

Last week the IMF said that Greece would need €10 billion over the next few months and an additional €50 billion in the next three years to pay the country’s arrears. Before making any repayments, Greece would need a 20-year grace period, making the last payment no earlier than 2055, the Fund said.

READ MORE: Greek creditors have Grexit scenario 'prepared in detail'

Meanwhile, European leaders have started openly talking about the possible Greek exit from the eurozone. European Commission President Jean-Claude Juncker said Tuesday Greece’s creditors had prepared a “detailed Grexit scenario”.

However, the European Council President Donald Tusk warned that no deal with Greece would affect everyone, claiming all parties are responsible for the crisis and have to find a resolution together.

Last week Greece failed to repay €1.6 billion to the IMF, becoming the first developed country to default on its international obligations.