IMF: Greece needs more than EUR 85 bln

Greece's EU creditors will have to go "far beyond" their existing estimates for debt relief in order to stabilize the financial situation in the country, the International Monetary Fund said on Tuesday.

"The EU needs to decide between a dramatic extension of grace and payment periods for the debt, direct cash payments to the government to finance its deficit, or a debt "haircut", or write-down," the IMF said in an updated study of the country's situation, according to AFP.

The Fund also warned that given "considerable" downside risks to the country's economic situation, Greece could need more than EUR 85 billion ($94 billion) tentatively agreed on Monday for the country's third bailout, UNIAN reports.

The new projections said the debt level would rise to almost 200% of GDP next year, compared to 177% in the previous estimate, in part due to the economy enduring another year of recession in 2015.

Given that profile, in addition to more financial aid for the government, the IMF said the country needs a large level of debt relief.

"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," the new study said.

"We are reiterating our policy conclusions... that Greece's debt is unsustainable and will require a significant debt operation," a senior IMF official said of the paper.

It said that if a debt re-profiling is chosen, it will require an extension of the grace period on debt payments of 30 years.

"Other options include explicit annual transfers to the Greek budget or deep upfront haircuts. The choice between the various options is for Greece and its European partners to decide," it said.