Greek Debt Crisis: Secret IMF Paper Casts Doubt On Bailout Demands

A confidential document from one of Greece's main creditors suggests the country will need debt relief that far exceeds what Germany and fellow eurozone countries have put on offer, Reuters reports, a conclusion that raises questions about the viability of the bailout deal agreed to Monday.

A page detailing the dire International Monetary Fund forecasts for Greek debt reads: "The dramatic deterioration in debt sustainability points to the need for debt relief on a scale that would need to go well beyond what has been under consideration to date -- and what has been proposed by the ESM," referring to the European Stability Mechanism, Europe's bailout authority.

On Monday, Greek and European officials left a marathon 17-hour summit with a deal in hand that would raise some 86 billion euros ($95 billion) in financing in exchange for a raft of structural and fiscal reforms, including pension reductions, tax overhauls and an updated privatization program.

Debt relief or restructuring, long a central demand of the ruling coalition in the Greek government, remained only a distant possibility in the language of the agreement.

But the IMF document floats several ideas that were kept off the negotiating table, including a 30-year grace period on debt repayments (including recent bailout debts) and "deep upfront haircuts," or debt writedowns.

Though these types of proposals have been rejected out of hand by Germany, Greece's largest creditor and staunchest opponent, German officials have echoed the IMF's reasoning that Greece's debts are "highly unsustainable."

Last week, German Finance Minister Wolfgang Schäuble confirmed the IMF's assessment that Greece will not be able to pay its debts, but concluded that "there cannot be a haircut because it would infringe the system of the European Union."

The disclosure of the IMF estimate is likely to complicate efforts of Prime Minister Alexis Tsipras, who has until Wednesday to wrangle his own parliament into supporting the austerity measures tied to bailout funds.