IMF Says It Won’t Release Funding for Greece Until There’s Broad Support

By Sandrine Rastello - Nov 18, 2011 3:25 AM GMT+0700

The International Monetary Fund won’t release the next tranche of funding for Greece under a 110-billion euro ($148 billion) package with the European Union until there is broad political support for the measures attached to the loan, a spokesman said.

“It’s important that the unity government now shares its commitment to the implementation of the economic program” and the decisions agreed by European leaders last month, IMF spokesman David Hawley told reporters today. “Once broad political support” for the measures “is assured, then we can proceed with completion” of the review and the release of the tranche.

Greek Prime Minister Lucas Papademos, a former European Central Bank vice president, won a three-month mandate to implement budget measures and ensure a second bailout package from the IMF and euro nations that was agreed to last month. The Greek government is seeking the release of 8 billion euros under the first rescue plan by the middle of December.

The IMF, which will finance about 2.2 billion of the 8 billion-euro tranche, is seeking assurances of political support from Greece, Hawley said, while declining to describe what form those should take.

Written Commitment

European finance ministers expect a written commitment from the Greek government on the measures, the European Union Economic and Monetary Affairs Commissioner Olli Rehn said earlier this month.

Papademos, who won a confidence motion yesterday, is also completing next year’s budget and working on a voluntary debt swap that is part of the second bailout agreement.

Hawley also said that a mission going to Italy at the end of the month to track that country’s progress in reducing its debt burden will be an IMF-only team. Italy has not requested financial assistance, he said.

Asked about the European debt crisis, Hawley said there is “great concern” about the region.

“It is important that the European authorities move expeditiously to implement their plans to strengthen a comprehensive crisis management framework,” he said.

To contact the reporters on this story: Sandrine Rastello in Washington at srastello@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net