The International Monetary Fund hasn't ruled out putting together more aid for Greece to help the country stave off an unlikely default, if ever needed, a person familiar with the matter said, The Wall Street Journal reported.
In May, the IMF, European Commission and European Central Bank gave Greece access to a €110 billion ($143 billion) rescue package to avoid bankruptcy in exchange for strict austerity measures.
"Despite the exceptional access and support Greece has been given so far, that does not of itself preclude a future follow-up or additional arrangement with the IMF after its expiration in three years," the person said.
This is the first hint that the IMF and other international lenders won't let Greece slide into bankruptcy if the country can't regain the confidence of markets, even after meeting the stringent conditions of the current assistance. The IMF is biding its time and hoping Greece rights itself without an extension of aid, bond-market analysts say. The fund doesn't want to pre-empt Greece's re-entry into borrowing from international markets, which is slated for next year, a senior analyst added.
Greece depends almost completely on support from the IMF and the European Union. With the exception of recently resumed monthly Greek Treasury bill auctions, it is frozen out of bond markets because its borrowing costs there are unsustainably high. Yields demanded on Greece's 10-year benchmark bond recently topped 11%.
"But the IMF expects Greece to return to normalized bond-market issuance and borrowing from international markets next year, so they don't anticipate the need for a further support package will arise," the person familiar with the matter said.
Market watchers have been concerned that despite repeated denials, Greece may eventually default on its national debt of €300 billion if borrowing rates remain unsustainably high after the rescue cash runs out in early 2012. Read more. (Subscription required.)
