The International Monetary Fund is blocking a critical €12bn ($17bn) aid payment to Greece just weeks before it is due, insisting it cannot go through without concrete assurances from European officials on a new Greek bail-out.
European finance ministers went into a meeting on Sunday believing the two issues had been separated and that the payment would go ahead as planned in early July once a new austerity plan was approved by the Greek parliament. Recent public commitments stating the EU would ensure Greece remains solvent through next year were thought to be enough to secure the backing of the IMF, due to disburse €3.3bn of the aid payment.
But amid continuing disagreement between eurozone countries over the terms of a new bail-out, IMF officials told the emergency gathering they needed firmer commitments before making the payment, according to three eurozone officials briefed on the meeting. IMF officials said they had been consistent in their determination that funding must be in place for the next year before they can distribute the next tranche. Both the IMF and European Union are also insisting Greece pass new austerity measures.