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Latin American states disapprove of new IMF loans to Greece

 
 
 
 
 
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Brazil’s executive director at the IMF Paulo Nogueira Batista

Latin American countries have refused to endorse a recent move by the International Monetary Fund (IMF) to release 1.7 billion euros ($2.29 billion) of rescue loans to Greece.

Paulo Nogueira Batista, who represents Brazil and 10 other Latin American countries on the IMF executive board, revealed on Wednesday that the group refused to vote in favor of the new aid package the IMF executive board approved on Monday.

The new loan raised to 28.4 billion euros ($37.6 billion) the total amount of funds the IMF has so far committed to Greece.

Brazil’s executive director at the IMF criticized the decision and voiced fears that Athens may not be able to repay its loans if its recovery program fails.

“Recent developments in Greece confirm some of our worst fears,” Batista said.

“Implementation (of Greece’s reform program) has been unsatisfactory in almost all areas; growth and debt sustainability assumptions continue to be over-optimistic,” he explained

Analysts say the abstention by the Latin American states highlights the increasing frustration among the emerging nations with IMF policy to bailout debt-stricken European nations.

Europe and the United States together hold the majority of voting power at the IMF.

Meanwhile, an IMF report published on Wednesday said Greece would not be able to repay the Fund if its eurozone partners stop supporting the country.

In order for Athens to receive further debt relief from the eurozone, it must follow through with even more austerity measures demanded by its lenders.

According to forecasts published by the European Union, Athens must cut an additional four billion euros in order to meet its 2016 fiscal targets.

However, the IMF report said there was “no evidence” that Greece could reach its target. “Achieving the significant fiscal adjustment still ahead in a socially acceptable manner is unlikely to be possible without much deeper public sector reforms,” it noted.

Greece has been cutting down its spending over the past four years, which has led to a massive an unemployment rate of 27 percent.

Despite the tough reforms and using up nearly 90 percent of its 240-billion-euro bailout since 2010, Greece still remains in creditors’ emergency ward and is excluded from bond markets.

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