IMF counting on Europe to help Greece slash debt

Says will fall short of Greece's needs by $14.59 bn by 2015-end, expects eurozone to plug the hole

The International Monetary Fund chief has said that she is counting on Europe to live up to its commitment to help Greece meet its targets for slashing debt under an international rescue program.

The IMF said in its quarterly review of Greece's progress earlier this week that the bailout program would fall short of the country's needs by a total of $14.59 billion by the end of 2015 and eurozone countries need to plug the hole.

The international lending agency described the expected shortfall as a "test of European support" and said finance ministers from the 17 countries that use the euro have already started discussing how to fill the financing gap.

Greece will also need debt relief from eurozone countries of about 4% of GDP in 2014-15, the IMF staff review said.

It noted the risk that Greece will fall short of IMF forecasts to start recovering early next year, which could mean even bigger losses for eurozone governments on their rescue loans.

"The European partners, the members of the euro group, have always indicated that they would consider any additional measures and assistance needed for Greece in order for that country to reach the debt threshold that had been agreed," IMF Managing Director Christine Lagarde told reporters yesterday.

"The commitment is, in my view, what matters most," she said, adding that Europe's help was contingent on Greece also living up to its obligations under the rescue program.

The austerity program mandated by international creditors calls for Greece to slash its debt from about 160% of GDP currently to 124% by 2020 and significantly below 110% by 2022.

The IMF is part of the so-called troika of lenders in the Greek rescue along with the European Central Bank and the European Commission.

Greece has been surviving on rescue loans from the IMF and other eurozone countries since 2010, when it lost access to long-term debt markets.

Austerity measures demanded in return for the troika's $319 billion bailout program have hammered the economy and sent unemployment surging to 27%.

Annual economic output is around a fifth smaller than when it entered recession in 2008.

Lagarde said Greece now needs to take decisive steps to privatize state-owned enterprises and improve tax collection, among other structural reforms of its economy, if it wants to bolster the confidence of foreign investors and encourage them to return.

She described as "unfortunate" the public criticism of the IMF's handling of the Greek financial crisis from one of the 24 members of her decision-making executive board.