Without citing any sources, Der Spiegel wrote on Saturday that high ranking IMF officials were recommending this to European governments due to Greece's current debt pile that is roughly one-and-a-half times its entire annual economic output.
Early in March, IMF European Director Antonio Borges told reporters he was "confident that Greek debt is sustainable", adding that the Greeks had made "quite a bit of progress on their banks" as well.
Since the IMF believes current measures no longer suffice, it would like to see either the interest rates on the debt lowered, the maturities extended or straightforward haircuts taken on the debt.
Although it believes Greece should soon begin discussions with creditors over a debt restructuring, it is still not willing to call for the move openly out of fears this could add even further pressure to Portugal and its sagging government balance sheet, Der Spiegel said.
In May of last year, the European Union and the IMF agreed to a 110 billion euros bailout to avoid default, a deal that was was modified late last month to reduce interest rates charged and extend the payback period on the rescue funds.
In turn, Greece promised to speed up structural reforms, complete a 50 billion euros state assets sale plan and introduce a strict fiscal framework to rein in its budget deficit and debt.
Klaus Regling, head of the European Financial Stability Facility, said last week that there were risks to the assumption that Greece would pay back its debts, but he did not identify any similar risks to Ireland in an interview with the Irish Times on Saturday.
"The assessment of the three institutions that have the task to make this kind of assessment -- the IMF, the European Commission and the ECB -- is that these countries will reach a sustainable debt situation at the end of their programmes," Regling told the newspaper.
"Portugal is struggling internally whether they should ask for assistance or not, we shall see, it's their decision. It's these three countries that will have serious problems for a while, but not the euro area as a whole."
"Spain overall is in much better shape. There's no programme, no need for financial emergency assistance in Spain."
Regling, who was speculated last month as being Germany's candidate for the presidency of the European Central Bank, repeated that he was happy in his current job and not a candidate.
"I am not a candidate and I'm happy to be here to manage the EFSF and to prepare the ESM," Regling said.
source: Reuters
