The IMF’s managing director repeated that the Greek debt is now unsustainable. Asks Athens structural reforms, fiscal consolidation, restoration of banking and also measures to a significant restructuring of its debt.
The general director of the International Monetary Fund (IMF) Christine Lagarde reiterated on Wednesday, July 29, that Greece needs a restructuring of public debt to complete the third economic and financial adjustment program successfully.
At a conference ‘online’ through Washington, Christine Lagarde noted that the IMF considered that the Greek public debt is unsustainable in an analysis about two weeks.
“I have repeatedly stated that for Greece to be successful and to your program [of economic and financial adjustment] produces results a significant restructuring of its debt is necessary, “he reiterated this Wednesday, July 29, the managing director of the IMF.
For Christine Lagarde, this is one of the pillars to boost the economic and financial recovery of Greece, as well as the need to implement structural reforms, budgetary consolidation and to provide funding conditions.
The director-general of the IMF considered that these are the key points to make the Greek economy “give back” and re-win “financial sovereignty”, meaning “return to the markets without any support” institutional.
Asked about how he sees the opposition of the Greek Government to the third financial assistance program, with Prime Minister Alexis Tsipras to state that does not believe in the text, former French Finance Minister said that “political noise is often a necessity. “
” I myself have been in politics and there is much that is said, but what matters at the end of the day is what is done, “he said.
Christine Lagarde also said that the Greek government “has shown the determination” to approve the measures accompanying the program in Parliament and that it is now important to see how these measures are implemented. “This is to show that the program belongs to the Greek authorities,” he said.
According to the IMF, “the Greek public debt has become highly unsustainable due to easing of policy over the past year, along with the recent deterioration of economic and internal financial context because the banking system closure which significantly expanded the adverse dynamics. “
” The financial needs until the end of 2018 are now estimated at 85 billion euros, the debt is expected to peak close to 200% of GDP over the next two years, “the IMF wrote three weeks ago, that these estimates assume a scenario where you can quickly agree a new – and third -. assistance program
As Europeans refuse to forgive debt, the IMF suggests that they may have to increase “dramatically” for 30 years the grace period for early repayment of loans already granted, but also the near, which could amount to 50 billion euros, according to admit in Brussels. “Other options include explicit annual transfers to the Greek budget or marked ‘hair-cuts’. The choice between the various options it is up to Greece and its European partners,” writes the IMF, which excludes, for its part, make any move to ease payment terms of the loans granted to Athens.
When equate promised a third bailout for Greece, the leaders of other countries of the euro acknowledged that there are “serious concerns about the sustainability of Greek debt” due “the relaxation of policies in the last twelve months.” It was, however, excluded the possibility of forgiving loans guaranteed by European taxpayers, as was claimed by Syriza. “The euro summit underlines that ‘hair-cuts’ in nominal debt can not be realized.”
Since the possibility of returning to stretch the maturity of European loans and grace periods returned to be assumed, in line with what had already been promised to the country in 2012. “The Eurogroup continues prepared to consider, if necessary, additional measures (possible longer periods of shortage and payment) to ensure that the gross financing needs remain at sustainable levels “.
” These measures will be conditional upon full implementation of the measures to be agreed in a possible new program and will be considered after a first positive review “of program implementation, adds up. The problem here is that for the IMF get a third rescue, previously requires assurances that the debt is sustainable, whereas Europeans say they are willing to revise the payment terms of the loans over only when they see more evidence of real reform commitment in Greece.
At the moment, interest rates charged to Greece are almost equal to that of the euro bailout funds (which have maximum rating) manage to capture the markets, having been decreed a period of grace ten years for the payment of interest (Greece only begin to be paid to European in 2023), while the maturities have been extended to an average of around 30 years. It is more favorable conditions than those applied to other rescued the euro, including Portugal
In the early ‘online’ conference, and before answering questions submitted by journalists, the managing director of the IMF made a small summary of the outlook for the global economy.
Referring to the Eurozone, Christine Lagarde said that “despite the situation in Greece” the whole economy 19 of the single currency is showing positive signs, also due to the recovery of countries that have completed their adjustment programs, such as Ireland and Portugal, “that are beginning to achieve better results.”
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