International Monetary Fund slams Greece deal, encouraging lenders to write down debt

Emma Haslett
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Prime Minister Alexis Tsipras faces another day of persuading Greeks to accept the deal (Source: Getty)

The International Monetary Fund (IMF), one of Greece's three key lenders, has heavily criticised a deal it reached with its creditors at a summit over the weekend, saying the country's debts have become "highly unsustainable".

On Monday the Fund had said it "stands ready to work with the Greek authorities and the European partners" on the deal, but overnight it emerged it had encouraged Eurozone leaders to write down debt.

The words are seen as a stinging blow to Germany, which has been against writing down debt throughout the six months of negotiations over a deal. German Chancellor Angela Merkel's argument was said to be that if lenders write down debt for Greece, they may have to take the same action for other bailed-out countries.

The IMF's strong words come as Greek Prime Minister Alexis Tsipras faces another day of trying to persuade his parliament to accept the economic reform package, which includes streamlining Greece's VAT system, a hike in the pension age and a raft of changes to the justice system.

Critics have accused him of bowing to creditors' demands and reneging on promises made to voters last week during the referendum. If the deal is passed, it could unlock as much as €86bn (£60.4bn) for the already debt-ridden country over the next three years.

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