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Can the Greek bailout survive without the IMF?

Despite Greek government officials playing down reports that the International Monetary Fund (IMF) could be ready to pull out of talks for a third bailout, analysts warned that the country's latest rescue package looked increasingly in doubt.

The finer details of Greece's third aid package – worth 86 billion euro ($94 billion) -- are currently being discussed by the IMF, European Commission and European Central Bank, as well as the European Stability Mechanism (which distributes bailout funds), in Athens.

But the IMF might have thrown a curveball into the talks, following a report on Thursday in the Financial Times that, without debt relief for Greece, it would not be able to take part in the latest aid package. The report said that the IMF's board has also been told that Greece's high debt levels and poor record of implementing reforms disqualifies it from a third bailout.

Christine Lagarde
Yuri Gripas | Reuters
Christine Lagarde

When contacted by CNBC, the IMF would not comment further but cited comments from spokesperson Angela Gaviria, who said on Thursday that the IMF was reiterating a position on debt relief that it has stated before.

"As we've said before, the IMF can only support a program that is comprehensive. What do we mean? We mean a program that ensures medium-term sustainability," she said during a conference call.

"In order to ensure that sustainability, that medium-term sustainability, there's a need for difficult decisions on both sides and by both sides. I mean, difficult decisions in Greece regarding reforms, and difficult decisions for Greece's European partners about debt relief."

European economist at Capital Economics, Jessica Hinds, agreed that a debt write-off was essential and without one, Greece's latest bailout would fail sooner or later.

"Even Tsipras himself has conceded that debt relief would only come after the successful completion of the first review and the creditors have been non-committal even about that," she told CNBC Friday.

Read MoreGreece's Tsipras on shaky ground, warns of elections

"A debt write-off is absolutely necessary for the Greek economy to stand any chance of a full recovery. Unfortunately, the worsening economic climate has made it even less likely that Greece will be able to meet the budget targets required to pass future reviews."

Greek government officials appeared unfazed, however, saying that the IMF was still "participating normally in the negotiations these days." Speaking on the condition of anonymity, the officials noted that "the position of the IMF regarding the viability of the debt is not new. Ms Lagarde has mentioned this many times."

Time is of the essence in the talks, however. The country has a 3.2 billion euro debt repayment due to the European Central Bank on August 20 and needs the aid to be released at least a week before then, European officials told CNBC.

Michael Hewson, chief market analyst at CMC Markets, said on Friday that without the IMF's participation, Greece did not stand much of a chance of making the payment deadline.

"(The IMF's move) will make it extremely difficult to agree on any form of bailout package in the time allotted simply because Germany has insisted that the IMF has to be involved, which seems rather bizarre, given that of all the countries involved it is Germany who opposes the concept of any form of debt relief the most," Hewson said in a note.

Germany – Greece's largest euro zone lender -- is reluctant to grant the country further debt relief. Berlin fears a public backlash at home and are keen to avoid setting a precedence for other indebted euro zone countries to also ask for debt relief.

Given that the IMF has previously warned its fellow lenders in Europe that Greece would need debt relief, the latest report shouldn't be a surprise, Chris Scicluna, head of Research at Daiwa Capital Markets, told CNBC Friday, adding that the latest from the IMF "just illustrates what a mess the whole bailout talks are in."

"I don't think this whole IMF thing should come as a surprise, it should've been expected. They don't want to give the green light to a deal before they're confident that the issue of debt has been addressed."

"It just adds another layer of complexity to an already complex situation, however," Scicluna said. He believed that, ultimately, the latest bailout deal was doomed to fail. "Greece is in the last chance saloon to stay in the euro zone. There are many questions over whether it can make this deal work anyway, when its economy is contracting and politics is so messy."

As such, Hewson said Greece could be reliant on more emergency bridging loans in the meantime.

"Given that Greece needs to make a 3.2 billion euro payment to the ECB by 20 August it seems highly unlikely that (Germany's) Bundestag would agree a new 86 billion euro bailout without IMF participation, which raises the rather thorny prospect of further bridging finance, in exchange for further prior actions or reforms."

Enacting reforms is easier said than done for Prime Minister Alexis Tsipras. His leadership of the leftwing Syriza party looks increasingly tenuous on the back of opposition to his capitulation earlier in July to lenders demands for spending cuts and reforms, in return for a rescue for near-certain bankruptcy and exit from the euro zone.

Read MoreGreek PM battles to stop Syriza party split

Many far-left and more radical members of Syriza, and many members of the Greek public, oppose a third bailout for Greece because of the years more austerity it will entail.

On Thursday, Tsipras scrabbled to stop his party from a fatal split, telling an emergency central committee of his party that the party faced a "big dilemma" -- to "succumb or go ahead with a compromise we were forced into," Reuters reported.

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt. Follow us on Twitter: @CNBCWorld