Greece in billions of financing gap over next 3 years

WASHINGTON - Financing needs for Greece could add up to over 50 billion euros ($55.42 billion) over the period from October 2015 to end 2018 in order to keep the country afloat, the International Monetary Fund (IMF) said in a staff report on Thursday.

A man walks past the headquarters of Bank of Greece as graffiti and stickers reading "No" are seen, in Athens, July 2, 2015.   [Photo/Agencies]

The IMF's warning came before Greece's upcoming referendum on July 5. Although the Greek government stressed the referendum is on its creditors' offer for a reforms-for-cash debt deal, skepticism and strong reactions that the referendum could lead to Grexit is also widespread in Greece.

The report said Greece is unlikely to close its financing gaps from the markets on terms consistent with debt sustainability.

It slashed Greece's economic growth forecast in 2015 to zero percent, compared to a growth of 0.8 percent in 2014.

The estimate of the additional 50 billion euros in funding, including 36 billion euros from EU lenders, was based on the assumption that existing support from the EU and IMF would continue through this summer.

The report was prepared before the Greek authorities have closed the banking sector, imposed capital controls, and incurred arrears to the IMF and did not reflect these developments, which the IMF believe are likely to have a significant adverse economic and financial impact.

In May 2010, the IMF approved 30 billion euros in financial assistance for Greece under a Stand-By arrangement, and then in March 2012, the lender approved 28 billion euros for Greece under an extended arrangement to support its economic reform program.

To date, Greece has 21.2 billion euros in outstanding obligations to the IMF. A repayment of about 1.5 billion euros was due to the IMF on June 30. Greece did not make the repayment when due and is now in arrears to the Washington-based lender, which makes Greece the first advanced economy default on IMF debt.