Greece to repay IMF; IMF financing doubtful

ECB extended loan worth of €7bn to Greece last week. The country should be able to pay the ECB €3.5bn debt redemption due on Monday. On top of that, the Greek government should settle the IMF missed payments (€1.54bn in June and the €0.45bn from last Monday) and the €0.45bn arrears to the Bank of Greece (SDR money used to pay back the IMF in May). 

The IMF's financial involvement is questionable, given: 1) its already high exposure to Greece, and; 2) the IMF's view that Greek debt is unsustainable. As a result, drafting the new program is likely to prove more problematic and lengthier than hoped by EU leaders.

Last week's deal followed by the vote at the Greek and other national parliaments enabled the opening up of the formal negotiation process for a third bailout. According to the ESM, it may take up to four weeks to have the three-year programme ready. Risks that this will take longer are high, however. In particular, according to the EU Commission, Greece's borrowing needs are close to €80bn, of which €40bn to €60bn is likely to come from the ESM and the remainder from the IMF.