IMF attacks EU over Greek bailout

The International Monetary Fund has attacked the bailout deal offered by eurozone leaders to Greece.

The creditor said Greece’s public debt had become “highly unsustainable” and it needed relief from its debts.

The BBC’s economics editor Robert Peston said the criticism was savage. The IMF suggested options including writing down the debt – a move most fiercely resisted by creditors.

The Greek parliament must pass four pieces of legislation on Wednesday.

It is the first requirement of the deal offered after hours of negotiation in Brussels on Monday.

The measures – which face resistance from Prime Minister Alexis Tsipras’ own MPs – include taxation increases and pension curbs.

Greece owes about 10% of its debt – €1.6bn (£1.1bn) – to the IMF.

It has missed two deadlines for repayment to the fund and is the first EU country ever to do so.

The BBC’s economics editor says the IMF’s assessment makes it much harder for Tsipras to persuade the Athens parliament to back the measures needed in Wednesday’s votes.

It brings into question the validity of the reform measures demanded by the eurozone and endorses the kind of debt write-offs the Greek public have been arguing for, he adds.

The IMF said it regarded forecast rates of growth for Greece as unrealistically high.

Its analysis released on Tuesday night pointed to Greek government debt reaching a peak of close to 200% of GDP or national income over the next two years, which it called “highly unsustainable”.

On Tuesday, Tsipras said in an interview on state television that he did not believe in the bailout offered but was willing to implement it to “avoid disaster for the country” and the collapse of the banks.

The conditional agreement to receive up to €86bn (£61bn; $95bn) from the EU over three years depends on further economic reforms – including the labour markets, banks and privatisation – being passed after Wednesday.

Hard-liners in Tsipras’ own Syriza party are likely to rebel and the junior coalition party, the Independent Greeks, have offered only limited support for the reforms