Yields on two-year Greek debt jumped to almost 9.7 per cent this morning, the highest since last summer, after the International Monetary Fund (IMF) admitted its executive board was divided over the issue of the country's bailout.
The IMF has been at loggerheads with other members of the so-called troika of creditors involved in Greece's bailout for almost a year. While the European Union and the European Central Bank have been keen to press forward with a €10.8bn (£8.7bn) aid package agreed in 2016, the IMF has expressed concerns the austerity measures imposed on Greece are too harsh.
One of the key disagreements between troika members is over the 3.5 per cent target for the country's primary budget surplus, which some IMF board members insist is over-ambitious unless some of Greece's debt is restructured.
Others disagree, however, and the fight has now moved into public view: in the statement, it said while most directors agreed Greece doesn't need further consolidation, some had called for a rebalancing of fiscal policy, primarily by broadening the number of people required to pay personal income tax and rationalising pension spending.
"Downside risks to the macroeconomic and fiscal outlook remain significant, related to incomplete or delayed policy implementation," it added.
"Public debt has reached 179 per cent at end-2015, and is unsustainable."
Yesterday the FT said it had caught a glimpse of an as-yet-unpublished report which showed the IMF's staff have argued debt in the country is on an "'explosive' path to reaching almost three times the country's annual economic output by 2060".