Monday, 12 November 2012

Greek debt storm

The Telegraph's Brussels correspondent Bruno Waterfield reports:
The Eurozone’s finance ministers have a big problem tonight: no one can agree on how much Greece is going to cost or who should pay.
The EU and IMF troika is completely split over how to deal with the fact that Greece will not make a debt “sustainability” target of 120 pc of GDP by 2020.
Estimates for how the target will actually work out vary wildly from 145pc to 125/30pc.
If Greek debt is unsustainable then the IMF is out of the aid programme for Greece increasing the burden for the eurozone and dealing a hammer blow to the EU’s credibility.
The fight between the IMF and the EU has been described as “total war” and represents the biggest test for the eurozone since the onset of the crisis three years ago.
If Greek debt is to be sustainable, keeping the IMF on board, then the EU is going to have to write off debts, opposed by the ECB and Germany and give Greece more time, which costs money.
Germany is keen to delay as long as possible (as with Spain) because as decision is going to cost the German taxpayer, the ECB is opposed to taking a hit on Greek debt and the IMF to throwing more of Washington’s money after bad in Greece.
The precondition of agreeing the next instalment for Greece is the troika report and the precondition for having a troika report is to thrash out the above meaning tonight’s meeting is a battle between Wolfgang Schaeuble, Mario Draghi and Christine Lagarde.
Without agreement from the German finance minister, the ECB chief and the head of the IMF the troika report for tonight’s discussion is restricted to “technical boxes”.
“Greece is broke. Someone is going to have to pay but no one wants to take the responsibility. They will fudge,” said a senior diplomat.

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