“This program is still in the books. It still may go ahead in the fall,” Borges said at a news conference at the IMF-World Bank annual meetings in Washington. - File Photo

WASHINGTON: The International Monetary Fund warned Friday that Europe should not put through a 50 billion euro (dollar 67 billion) private-sector restructuring plan for Greek bonds until Athens gets its economy back on course.

Antonio Borges, head of the IMF's European department, voiced caution about a European Union plan that includes the private sector in a second rescue package for debt-riddled Greece.

“This program is still in the books. It still may go ahead in the fall,” he said at a news conference at the IMF-World Bank annual meetings in Washington.

“It should never be put in place unless... we're confident that Greece is back on track,” Borges said.

“Because we're not going to create a whole series of guarantees and support for investors in Greece only to have Greece get into a major problem a few months later.

“It's only that we are confident that the Greeks are on track - only then does this program make sense.”

Private-sector involvement (PSI) is a key part of a second bailout package agreed by European leaders and private creditors on July 21 and awaiting ratification by the 17 eurozone member nations.

Its main component is a new 109 billion euros in financing from the European Union.

Under the PSI bond restructuring agreement, Greece's private bank creditors would accept a 21 percent “haircut” or reduction in value of the debt they hold, to lower Athens's interest costs.

Borges expressed concern about Greece's implementation of austerity measures agreed under the first, ongoing 110-billion-euro bailout from the IMF, the EU and the European Central Bank last year.

Greece is currently awaiting a new disbursement of eight billion euros from that plan, which it needs to keep paying its bills, including wages and pensions, through October.

A team from the “troika” of Greece's lenders is due to return to Athens next week to audit the government's progress on commitments before it gets the new money.

“We're concerned with what's happening on the budget front, but we're even more concerned with a certain lack of implementation of measures that were designed to get the economy growing again and to make the economy more competitive and more open,” Borges said.