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French economy minister says Greek crisis isn’t over, sees need for debt

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“Greece’s debt can now only be made sustainable through debt relief measures that go far beyond what Europe has been willing to consider so far”, the fund said in a new report.

Greek lawmakers vote on Wednesday on a package of reforms and financial aid agreed by European leaders in Brussels on Monday morning.

Eurozone finance ministers will hold a conference call on Wednesday to discuss the Greece situation.

But she faces a revolt within her own conservative ranks.

The International Monetary Fund said the bank closure and capital controls were “extracting a heavy toll on the banking system and the economy”, Reuters reported.

1245 – The European Commission will recommend providing Greece with bridge financing over the next month through the European Financial Stability Mechanism (EFSM), in defiance of strong British and Czech objections, EU officials say.

0722 – German Bund yields dipped on Tuesday as financial markets remained wary of the hurdles Greece needs to clear to receive vital financial aid from the euro zone.

It said European countries would now have to give Greece a 30-year grace period on servicing all of its European debt and a longer maturity extension.

Commission Vice-President Valdis Dombrovskis, presenting the European Union executive’s study, said what mattered was not the size of the debt stock but the annual debt service cost, which is already lower in Greece than in most euro zone countries because of an existing 10-year holiday on most interest payments.

Some of the 19 eurozone countries must approve the agreement through their parliaments before it goes ahead.

Slovakia and the Baltic states, which carried out wrenching fiscal adjustments, are just as tough, as are the Netherlands and Finland under pressure from anti-bailout Euroskeptics.

While the earlier study forecast the ratio would drop to 142 per cent by 2022, last week’s memo cited a figure of 170 per cent seven years out. The fund warned that it may not be able to participate int the new $96 billion bailout deal, unless Greece’s finances are brought under control.

Her easiest course would be to salami-slice the issue, giving a little loan extension at a time in return for strict conditionality, so no one in Germany could spot the moment when a “Schuldenschnitt” (debt cut) actually happened.

“In the short term, it’s not politically possible to reduce the debt”.

“But humiliation would have been for (Greece) to be driven out of the single currency – some perhaps wanted that – while the overwhelming majority of Greeks wanted to keep it”. Each day the goalposts shift a little.

1114 – The head of Greek opposition party To Potami says his group will support PM Tsipras’ bailout deal in parliament but rules out joining a government led by the leftist Syriza party.

Greece may need a 30-year grace period: report – MarketWatch


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