Greece gets the green light for third bailout

The International Monetary Fund has agreed a $1.8 billion (£1.4 billion) loan for Greece, ending a two-year impasse with the European Union over the debt-laden country’s third bailout.

The IMF has been reluctant to support its latest €86 billion (£77 billion) rescue in 2015 without EU nations agreeing to debt relief. Now it has agreed the loan in principle but won’t commit any funds until it gains “specific and credible assurances” from European lenders over the country’s debt sustainability.

Managing director Christine Lagarde said: “A debt strategy anchored in more realistic assumptions needs to be agreed. I expect a plan to restore debt sustainability to be agreed soon.”

IMF involvement is a key demand of creditors like Germany, who are reluctant to concede on debt relief until after September’s elections. Greece also needs to keep economic reforms on track to get the money but the IMF is worried that even with reforms, its debt will reach about 150% to GDP by 2030.

Creditors could bring the debt under control by extending grace periods, lengthening the maturity of the debt or deferring interest payments, the IMF says.