The IMF joined Germany on July 13 in pushing for private sector investors to help cut Greece's debt mountain as the euro zone sought to break an impasse on how and when to grant the country urgent aid.
With Germany hanging back, euro zone officials struggled even to set a date for leaders to meet to agree a way forward, raising fears financial markets might exploit a policy vacuum with a new onslaught on the bloc's high debtors.
"The principle of having a euro chiefs' meeting is accepted by the main players, including Germany," said one EU diplomat, adding that it was likely to happen next week despite earlier signals from Berlin that there was no rush to finalize a second package of aid.
First, however, countries have to agree how to involve private sector investors in tackling Greece's debt burden, a key demand of Germany before it signs off more support for Athens.
The International Monetary Fund backed the idea, saying in its latest review of Greece's troubles: "Comprehensive private sector involvement is appropriate, given the scale of financing needs and the desirability of burden sharing.
"Greece's debt service capacity may also need to be bolstered by combining appropriate PSI and official support," IMF officials wrote, referring to private-sector involvement.
Ratings agency Fitch cited the uncertainty for private bondholders and foot-dragging on giving more official aid to Greece when it downgraded the country further into junk territory on July 13.
(Reuters/VOVNews)
