The International Monetary Fund is maintaining its tough line on Greece
Here are three big points to come out of today’s regular press briefing by IMF spokesman William Murray.
The fund still doesn’t like the idea of an interim deal and is still insisting that Greece needs to reach a “comprehensive” solution with its creditors. “We cannot conclude the review based on a few measures. It needs to be comprehensive,” Murray told reporters.
The IMF does not want to talk – in public at least – about the possibility of a third bailout, or program, for Greece. “It’s way too early to talk about third programs. We are focused as you know on completing the current review,” Murray said. Which, of course, makes sense. The IMF has taken plenty of grief from shareholders and both internal and external critics over its work in Greece. So it’s not in a hurry to extend its presence there…
Greece can buy some more time if it wants to on its payments to the IMF. Athens owes the fund Euro1.5bn in four separate payments in June. But because it has multiple payments in the month it can choose to “bundle” those, Murray told reporters, and pay them all in one go on the final day of the month. The rule has been in place since the 1970s but is rarely used. The last country to invoke the rule was Zambia in the 1980s, according to Murray. Athens has not made any request to bundle its payments yet. But “they are entitled to do that if they want”, Murray said.
Greek finance minister Yanis Varoufakis warned the cash-strapped country could run out of money in two weeks, saying that the financial situation is “terribly urgent”.
“The liquidity issue is a terribly urgent issue. It’s common knowledge, let’s not beat around the bush,” he said.
“From the perspective [of timing], we are talking about the next couple of weeks.”
His warning came as European finance ministers prepared to kick off an Economic and Financial Affairs Council meeting today in Brussels.
Greece defied its more pessimistic commentators after making a €750m (£544m) transfer to its creditor the IMF, meaning it beat its deadline. The sheer size of the payment has led some to suggest it would be unable to pay.
As it attempts to stave of bankruptcy, Greece is trying to unlock the final €7.2bn tranche from its EU/IMF bailout fund. It has until the end of June to reach an agreement with its creditors.
Greece has scraped together funds to repay international creditors this month but will exhaust its cash reserves by the end of April, raising the possibility of a sovereign default next month if it fails to agree a new reform package with the eurozone.
A senior Greek official gave reassurances that a €458m loan instalment owed to the International Monetary Fund would be paid on April 9 as scheduled, along with another €420m due to international investors when a six-month treasury bill expires on April 14.
“We’ll meet international obligations without any problem but it will be a squeeze to raise cash for domestic payments in the second half [of the month],” the official said.
“Next month is a different matter. We are going to run out of money unless reforms are legislated to make some bailout funds available,” he said.
Greece has to make two further payments to the IMF in May amounting to €950m on top of €2.4bn of pension and salary payments. But Athens cannot raise financing by selling more treasury bills to Greek banks following a ban by the European Central Bank on increasing their exposure to the government, while foreign investors have been scared off by the country’s increased political risk. >> Read More
Greece, as a country, represents 2% of Europe’s GDP. The country lied in its financial to enter the EU. Since that time, it’s been officially bankrupt since 2010.
The country has since gone through a series of “bailouts” and experienced a 25% collapse in GDP (roughly equivalent to what Argentina experienced in its 2001 implosion).
And yet, despite all the bailouts and claims that Greece was “fixed,” the country is set to default on some of its debt this Friday.
How on earth does this farce continue? How can Greece be broke FIVE years after it was first allegedly “fixed”?
The answer is very simple. Greece was never fixed. The Greek bailout was about getting money to German and French banks, many of which would go broke if Greece defaulted on its debts.
This story has been completely ignored in the media. But if you read between the lines, you will begin to understand what really happened during the previous Greek bailouts.
Remember: >> Read More
Greece must immediately start adopting some of the economic reforms demanded by its creditors if it is to receive much-needed access to emergency funds in the face of a mounting March cash crunch, the eurozone’s chief negotiator has warned.
Jeroen Dijsselbloem, the Dutch finance minister who leads the Greek talks as chairman of the eurozone finance ministers’ group, told the Financial Times that he was prepared to make a “first disbursement” of the €7.2bn remaining in Athens’ €172bn bailout as early as this month.
But the funds would only be transferred if the new Greek government, which for weeks has resisted implementing measures contained in the existing bailout after campaigning to kill the programme, adopted reforms the two sides could quickly agree on.
“My message to the Greeks is: try to start the programme even before the whole renegotiation is finished,” Mr Dijsselbloem said. “There are elements that you can start doing today. If you do that, then somewhere in March, maybe there can be a first disbursement. But that would require progress and not just intentions.” >> Read More
26 February 2015 - 21:31 pm
Greek savers withdrew 12.2 billion (£8.9 billion) from their accounts in January amid fears over a standoff between Athens and its European partners, according to new central bank data.
The outflows underline the pressure that the Greek authorities have been under to reach a deal before the funding problem for its banks became too acute.
At the start of February the ECB withdrew a waiver that allowed Greek banks to access loans from the central bank using government bonds and government-guaranteed assets as collateral, forcing the institutions to rely on Emergency Liquidity Assistance (ELA) provided by the Bank of Greece. However, the amount that the Bank of Greece could provide is capped and subject to review every two weeks.
And this is what happened – ELA lending has spiked:
>> Read More
25 February 2015 - 19:22 pm
After the new Greek government fought valiantly a la David vs Goliath for several weeks, only to cave in the last minute and admit that the best it can do is continue the much hated policies of the predecessor Samaras government by extending the Greek bailout program, it now has a bigger problem: assuring its European “partners” that, having flipflopped, it is as trustworthy as the Samaras government. And none other than the German FinMin Wolfgang Schaeuble made that point early on Wednesday when in a radio interview with SWR2 radio, he said that it had not been an easy decision for euro zone finance ministers to extend the Greek rescue plan by four months and “much doubt remained about how credible Athens’ latest reform commitments really were.”
Reuters quotes Schauble who said that: “It wasn’t easy an easy decision for us but neither was it easy for the Greek government because (they) had told the people something completely different in the campaign and afterwards.”
“The question now is whether one can believe the Greek government’s assurances or not. There’s a lot of doubt in Germany, that has to be understood,” said Schaeuble who despite his misgivings, he has urged German lawmakers to approve the Greek extension in a vote in parliament expected on Friday. >> Read More
24 February 2015 - 19:57 pm
Just over a week ago, Yanis Varoufakis would have crushed and mangled anyone who would dare suggest that Greece would extend its current bailout program, because, the myth went, the new Syriza government had a mandate to end the Troika (since renamed to “Institutions”) and to crush the Memorandum (aka “existing bailout programme”). Since then much has changed, and confirming that the new government is really the old government, Europe can now rejoice, because as Bloomberg blasted moments ago:
- GREEK BAILOUT EXTENSION SAID TO BE APPROVED BY EURO AREA
Which means that as the “valiant” in words, if not deeds, new Greek government rolls over, the DAX is about to jump to new all time highs making rich Germans even richer. As for Greeks, not so much.
23 February 2015 - 19:01 pm
In line with Friday’s agreement, Athens have prepared Sunday a package of reform measures in order to secure a yet another tranche of the Troika bailout. However, the Greek planning, to be discussed Monday, might not fully satisfy the Germans, who have been increasingly jumpy to kick Greece out of the Eurozone. As the German parliament has the final say on whether or not Greece will remain in the euro area, the re-introduction of the drachma might be not such a distant perspective.
Skepticism in regard of the Friday’s compromise deal is rife in both Germany and Greece prior to the discussion of the structural reform, devised by the Greeks over the weekend. The leftie government of Alexis Tsipras, who earlier promised to end the austerity, imposed by international creditors, is harshly criticized within the nation for misleading the electorate by not sticking to their earlier promises. It seems like Greece is still intending to carry on with austerity and reform in order to stay in the Eurozone.
However, the Germans are not confident they want the poorly predictable nation of Greece in the common currency area. The Greek bailout has already cost over 100 bln euros without any positive developments, and any Greece’s proposals will be met with suspicion. >> Read More
21 February 2015 - 8:14 am
Why 4 and not 6 months? Simple: so that the humiliation of the Syriza government can continue with yet another bailout, aka “current programme”, aka Memorandum extension request just ahead of the biggest debt maturity for the remainder of 2015.