Dennis Novy is an Associate Professor of Economics at the University of Warwick. He is also a Research Fellow at the Centre for Economic Policy Research (CEPR) and an Associate at the Centre for Economic Performance (CEP) at the London School of Economics. He comments below on the Greek economy and IMF repayments,
"As part of a long series of scheduled payments, Greece is paying €900m to the IMF this week. Greece has enough funds to make this payment due to the latest EU bailout money received in July.
But this bailout money came with harsh terms attached. Greece is supposed to enact further spending cuts and tax rises, all on the back of a depressed economy, sky-high unemployment and dangerous deflation. No matter who wins Sunday's election, there is little room for investing in the economy, certainly not from the bailout money. In fact, the bailout programme is like a gigantic money recycling machine. The lion share goes back straight to creditors to pay back loans.
A critical issue is whether the IMF will join the bailout. Many European governments, Germany in particular, are keen on having the IMF on board. This would lend the bailout programme international credibility.
So far the IMF position has been that it cannot participate in new loans to Greece because it does not consider Greek government debt sustainable. In other words, if there is no serious debt restructuring, the IMF will not join the fray. The IMF has also come under criticism because of its large exposure to Europe and less focus on other regions."
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