The International Monetary Fund (IMF) believes that Greece will surely miss its 2020 debt target which, according to the bailout agreement, was set to be 120 per cent of GDP, according to an IMF preliminary report presented to the Eurogroup Working Group (EWG) and obtained by Reuters.

"It is clear that Greece is off track and there is no chance they will cut the debt to 120% of GDP by 2020 as envisaged. Rather, it will be 136%, and this would be under the positive scenario of a primary budget surplus, a return to economic growth, and privatization," a Eurozone official told the news agency, which did not hesitate to assert that Athens would have to accept new conditions before receiving the next tranche of aid.

ADDITIONAL FUNDS?

In any case, according to an EWG member, Greece is now thought to need €30bn in additional financing. The question remains as to how the extra aid would be funded and European authorities are reportedly considering various options such as interest rate reductions, maturity extensions, bringing forth some aid payments or even taking advantage of currently rock bottom Greek debt prices so as to carry out a buyback.

If actual funds were to be disbursed, they would have to come from the ESM (European bailout fund) and the move would likely face opposition from members such as Finland, the Netherlands and Germany.

MERKEL MAY BE UNABLE TO GAIN SUPPORT FOR MORE AID

Nevertheless, Bild pointed out that German Chancellor Angela Merkel will have a tough time getting the necessary parliamentary approval. According to the German newspaper, Berlin's government could see 25 votes from its own coalition defect to the opposing side. On the assumption that all opposing party members vote against the measure then Merkel would only achieve 305 votes while the "nays" would be able to muster a formidable 315.

If some agreement eventually does eventually coalesce, Eurozone finance ministers could possible evaluate the proposal at their next meeting scheduled for November 12th.

JM

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