The governing board of the International Monetary Fund has decided to abolish an exemption that permitted the funding of member-states even if they did not meet the necessary terms, provided that they are systemically critical. The abolition came at the recommendation of IMF head Christine Lagarde.

This exemption is what allowed the IMF to participate in the first and second Greek bailout programs, despite the country’s public debt having repeatedly been declared non-sustainable. The decision was take in order to restrict the Fund’s exposure to risk and is part of Mrs. Lagarde’s campaign to secure her reelection at the IMF’s helm.

With the Greek public debt currently unsustainable, the IMF has essentially decided to not provide any funding in the third bailout program and will limit itself to providing technical advice. This development is expected prompt reactions from Athens, Brussels, Berlin and Frankfurt, since European officials have underlined the importance of the IMF’s participation in the Greek program.

Greek Prime Minister Alexis Tsipras is scheduled to meet with Mrs. Lagarde on the sidelines of the annual World Economic Forum in Davos and is expected to discuss the issue, along with pledging the Greek government’s support in her candidacy.