IMF buys time over Greek debt, but at what cost?

Zurich

THE International Monetary Fund has resurrected an old technique - commonly used in the 1980s during the Latin American debt crisis - that would allow Greece to avoid a payment default next month on debt owed to European creditors.

The reprieve also gives the IMF and its European partners time to sort out their technical differences on the struggling country's growth and budget outlook. But the Fund's elegant compromise still leaves Greece under the shadow of an enormous debt overhang; reducing it requires that Europe find a way to set aside national politics and act on the basis of economic logic and necessity.

Europe and the IMF have been unable to reconcile two views of Greece's debt sustainability, with the two sides' differences spilling over into the public domain. Guided mainly by a cash-flow analysis, European authorities argue that low…