Greek lawmakers are under pressure from the International Monetary Fund to overcome the current impasse over its bailout, a Greek minister told CNBC on Friday.
"There's pressure from the IMF, certainly," George Katrougalos, the Greek alternative foreign minister for EU affairs, told CNBC over the phone on Friday.
Katrougalos told CNBC that, at the moment, most of the pressure comes from the International Monetary Fund (IMF) and not from European creditors. This could be the case because the IMF is itself under pressure to decide on whether or not it will be part of the Greek bailout program. The IMF said it would not comment on the minister's remarks when contacted by CNBC.
Greece is currently on a third bailout program worth 86 billion euros ($92 billion). The current impasse between Greece, the EU and the IMF over the implementation of austerity measures sent the country's two-year bond yields rising to around 10.09 percent on Thursday, their highest level since June last year, on fears that the country could soon run out of cash and would not be able to make crucial debt repayments.
The institution led by Christine Lagarde has decided not to join the third financial rescue for Greece until there's evidence that Greek debt will be made sustainable. The latest bailout program, which began in 2015, has a year-and-a-half still to go.
For some countries, such as Germany, the Netherlands and Finland, the IMF's participation in the program is essential.
"It's not so much about the funds, the Europeans have enough money to lend to Greece," an official close to the bailout talks, who asked to remain anonymous due to the sensitivity of negotiations, told CNBC earlier this week, adding that the issue is more of credibility.
According to Katrougalos, the IMF is currently questioning both the Greek and the European fiscal estimates and wants to revisit questions that have already been fixed, including reforms on pensions.
The same official, who is part of the negotiations, told CNBC on Friday that "there's a lot of focus on the IMF...but even if the IMF wouldn't exist on this planet, Greece and the EU wouldn't be able to conclude the second bailout review."
Deal next week?
Katrougalos told CNBC that "there are ongoing efforts to reach a deal next week." If indeed European creditors recognize next week that Greece has completed all the agreed measures for the second bailout review, then this would pave the way for new disbursements.
With fresh funds, Greece should be in condition to meet deadline payments next summer and avoid a financial collapse. But the view among creditors is that such a deal next week is "unlikely". It all depends on Greece and whether it implements the reforms that creditors demand but, according to the official involved in the talks, there are at least between 40 to 50 measures that Greece has yet to put through to conclude the second review.
Debt
However, beyond the second bailout review, the Greek debt issue and the IMF's participation are yet to be solved.
"It's necessary to have some debt relief," Katrougalos said, "because we want to enter the QE (quantitative easing) of (ECB President Mario) Draghi."
Being eligible to be part of the European Central Bank's QE program would "help the momentum that we have," the minister said, referring to the recent data showing that Greece returned to economic growth in 2016. At the moment, the ECB cannot purchase Greek bonds because they do not have an investment grade rating.
According to the latest IMF report, Greece should grow 2.7 percent in 2017, after growing 0.4 percent last year.
Snap elections?
Moody's credit rating agency said Thursday that it is concerned with the current impasse between Greece and its creditors, adding that this could lead to earlier elections.
"The European creditors also have a more optimistic view of Greece's fiscal and macro prospects than the IMF, including that Greece will be able to maintain primary surpluses of 3.5 pecent of GDP for the coming years. The IMF, meanwhile, believes Greece can achieve a primary surplus of only 1.5 percent per year. The impasse has a number of risks for Greece. First, it puts pressure on the Greek government to deliver more measures than it had originally envisaged to conclude the second review," Moody's said in a note released Friday.
"Although we expect that the Greek government will implement the required measures, the risk of early elections is increasing given the rising political cost to the government and its slim majority in the parliament...Early elections might bring a new and more reform-minded conservative government, but Greece's economy would be hit again by prolonged uncertainty, after having just started to record positive growth," Moody's said.