Greece’s ruling Syriza party just got a huge boost for their campaign to get Greeks to reject current bailout proposals in Sunday’s referendum.

The International Monetary Fund (IMF), one of Greece’s three main creditors, admitted Thursday that Greece’s debts need restructuring.

That’s pretty much the key demand Greece has been making all along. Finance Minister Yanis Varoufakis told Bloomberg TV earlier Thursday that he’d rather “cut his arm off” than sign a new bailout deal that didn’t include rehashing the deals to make payment dates more realistic.

Prime Minister Alexis Tsipras and his ruling Syriza party’s major issue with bailout proposals so far has been that they effectively turn Greece into a zombie country, stumbling along the poverty line and existing solely to pay off its heavy debts.

The IMF has now admitted that Greece’s debts are currently “unsustainable” and can’t cope with any debt repayments for at least 3 years. Its next payment — €3.5 billion (£2.5 billion, $US3.89 billion) to the European Central Bank — is due July 20.

It also admits Greece will probably need a debt “haircut” — writing off some of the money it owes.

Some of the IMF’s proposals are even more radical — one idea is to give Greece a 20-year “grace period” during which it wouldn’t have to pay debts.

Greece’s economy has been crippled by huge debt demands, shrinking 25% over the last five years, and the IMF says the country will need €50 billion (£35.5 billion, $US55.5 billion) to survive over just the next 3 years.

All of this is a huge boost for Tsipras, who told Greeks in a TV address on Wednesday that the country’s creditors need to give it “breathing space.”

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