Euro Zone Divided Over IMF’s Role In Greece

According to a report by the Financial Times, the euro zone is divided on whether to involve the International Monetary Fund (IMF) in rescuing Greece. This is the first time that cracks have appeared in the euro zone’s stance on not involving the IMF in bailing-out Greece.

According to EU policymakers, at least three of the sixteen euro zone countries are open about involving IMF in a rescue operation. The three nations, who favor an IMF intervention, in case Greece requires financial aid, are Finland, the Netherlands, and Italy. The euro zone countries had repeatedly said that they were not keen on having the IMF, which has been providing technical assistance to Greece; provide any financial assistance to Greece as the problems faced by the country could be solved within the currency union.

Even though asking IMF for financial assistance, if Greece requires one, makes sense as it has experience in dealing with such situations, some governments in the euro zone have not been too keen to ask IMF for help as they believe that European prestige and credibility will be at stake if they turned to IMF. However, Greece has not ruled out IMF aid and said that if it found that borrowing costs were too high then it could turn to IMF for aid. The resistance has mostly come from Spain and France. On Monday, finance ministers of euro zone countries said that individual governments within the currency union could provide bilateral loans to Greece, if in case it found difficult to refinance its massive debt.