Athens has informed the International Monetary Fund (IMF) that it will end its obligations to the unpopular rescue program, which placed crippling austerity measures on the country, more than a year early.
Four years into the IMF’s rescue plan, which saved Greece and possibly the rest of the European Union from financial disaster in 2010, Athens believes it is stable enough to exit the program.
At €240 billion (£188 billion), the bailout was the largest rescue effort in financial history.
“Not only do we not need a new memorandum [rescue loan agreement]. We don’t need the rest of the money that from the start of next year we were on course to get from the current memorandum. We can leave it one and a half years earlier… that is our goal,” Prime Minister Antonis Samaras told parliament just prior to his government surviving a vote of confidence on Saturday.
Greek Finance Minister Gikas Hardouvelis, informed IMF Director Christine Lagarde on Sunday of the decision.
The financial lifeline from the IMF had been scheduled to expire in March 2016, while funds provided by the eurozone – the bulk of which came from Germany – end this year.
Last week, Lagarde advised Athens to continue with the program, saying that Greece is still confronted by a budgetary shortfall of about €15 billion for 2015.
“The country would be, in our view, in a better position if it had precautionary support,” she said. “So we are talking about evolution in the relationship. But we believe that the relationship can still be extremely helpful for the country to move on.”
Following the announcement, a Greek official emphasized that Athens was not ending its relationship with the power lender of last resort: “The IMF continues with a post-program review in every country it lends to…we will have a relationship with the IMF but not under the same conditions,” Reuters quoted the anonymous official as saying.
The IMF released a statement that attempted to put a positive spin on the news: “Ms. Lagarde commended the authorities for the significant improvement in Greece’s fiscal position and encouraged them to implement decisively key structural reforms in line with program commitments.”
For the government of Greek Prime Minister Antonis Samaras, the €240 billion rescue plan was obtained at the huge price of forcing Greeks, already under a heavy strain from the global financial crisis and runaway unemployment, to accept reforms and harsh austerity measures.
The overall situation placed not only severe economic pressure on the Greek economy, but political pressure as well, as nationalist parties, like Golden Dawn, appeared on the scene, pledging to work on behalf of struggling Greek citizens.