IMF seeks debt relief for Greece until 2040

© Alkis Konstantinidis
Officials at the International Monetary Fund (IMF) are urging the EU to place a moratorium on Greece’s interest and principal payments on its bailout loans until 2040, the Wall Street Journal reports, citing sources familiar with the talks.

READ MORE: IMF calls on EU to grant Greece debt relief

According to the proposal, the country’s debt repayments would be spread out between 2040 and 2080 at the current 1.5 percent interest rate.

The proposal, described by one European official as “hardcore, really,” was presented last week. It aims to keep Athens’s annual debt-service needs below 15 percent of its gross domestic product, according to the IMF’s long-term outlook for the Greek economy.

At the moment, Greece’s debt exceeds €200 billion (about US$225 billion) with another €60 billion to come under the bailout plan.

The country’s debt is highly unsustainable, according to the Washington-based organization. That is reportedly the main reason why the IMF refuses to participate financially in the bailout program.

READ MORE: Berlin eases objections on Greek debt relief deal

The Fund’s suggestion is unlikely to be accepted by Eurozone members, particularly Germany – the biggest lender to the crisis-torn country. The eurozone’s leading economic power insists on IMF participation in financing Greece.

The €86 billion bailout to Greece was agreed by international creditors (the IMF, the ECB and the European Commission) last summer. After several rounds of negotiations Athens agreed to introduce austerity measures required for the loan. The country has been fighting a financial crisis since late 2009.