While leaving the important details for easing of a debt burden to be hammered out after Germany’s federal election next year, Greece’s creditors reached a preliminary accord for a debt relief package.
The International Monetary Fund retreated from its hard-line stance for concrete and generous measures on Greece’s debt at a meeting of euro-area finance ministers in Brussels that ended early Wednesday and allowed creditors to announce a “breakthrough” despite giving no figures or real commitments. Greece has secured a 10.3 billion-euro ($11.5 billion) aid payout.
"It seems very much like an agreement of convenience more than anything else. Greece needed the money now -- they were already behind on payments. Europe really needed to show a stable hand” before the June 23 referendum on whether the U.K. should stay in the European Union,” Peter Rosenstreich, head of market strategy at Swissquote Bank told Bloomberg TV.
After the Washington-based IMF yielded its stance and allowed an accord to be reached the ministers agreed to release the much-delayed aid payout and set a path toward debt relief following the 11-hour gathering. Due to pressure from domestic electorates that have grown weary of helping the Greeks, some of the restructuring measures were resisted by some euro-area nations including Germany and the Netherlands.
“We on the part of the IMF have made a major concession -- and I might as well be open about that -- we had argued that these debt-relief measures should be approved up front and we have agreed that they will be approved at the end of the program. We all showed flexibility,” said the IMF’s European Department Director Poul Thomsen.
IMF satisfied Germany, which had persistently demanded the IMF’s involvement since the bailout was agreed last summer, Thomsen said the IMF would participate financially in the Greek program later this year.
Sinking as low as 6.98 percent on Wednesday, the yield on Greece’s 10-year bond fell below 7 percent for the first time since November subsequently rising to 7.15 percent.
Dutch Finance Minister Jeroen Dijsselbloem, who chaired the meeting said that despite the agreement, there’s no guarantee that the IMF will join the Greek program. He said that the IMF has its “own rules and procedures to follow so later this year they will make a new debt-sustainability analysis and assess the debt measures we have put on the table and they will come to their opinion.”
The European Stability Mechanism, the euro-area’s crisis-fighting fund, will seek to reduce interest-rate risk without incurring additional costs as a part of the short-term debt relief measures that would kick in before 2018.
“The EU put again temporal political considerations above the long terms interests. There is a real danger that, by the time decisions on Greek debt are made in 2018, interest rates would have risen sharply, eliminating any chance of eventual recovery for Greece,” Nicholas Economides, professor of economics at Stern School of Business, New York University, said.
According to a statement, to cover debt-servicing needs and to clear initial arrears, the aid disbursal will include a 7.5 billion-euro portion that will be released in June. The remainder of the payout will be made after the summer.
(Source:www.bloomberg.com)
The International Monetary Fund retreated from its hard-line stance for concrete and generous measures on Greece’s debt at a meeting of euro-area finance ministers in Brussels that ended early Wednesday and allowed creditors to announce a “breakthrough” despite giving no figures or real commitments. Greece has secured a 10.3 billion-euro ($11.5 billion) aid payout.
"It seems very much like an agreement of convenience more than anything else. Greece needed the money now -- they were already behind on payments. Europe really needed to show a stable hand” before the June 23 referendum on whether the U.K. should stay in the European Union,” Peter Rosenstreich, head of market strategy at Swissquote Bank told Bloomberg TV.
After the Washington-based IMF yielded its stance and allowed an accord to be reached the ministers agreed to release the much-delayed aid payout and set a path toward debt relief following the 11-hour gathering. Due to pressure from domestic electorates that have grown weary of helping the Greeks, some of the restructuring measures were resisted by some euro-area nations including Germany and the Netherlands.
“We on the part of the IMF have made a major concession -- and I might as well be open about that -- we had argued that these debt-relief measures should be approved up front and we have agreed that they will be approved at the end of the program. We all showed flexibility,” said the IMF’s European Department Director Poul Thomsen.
IMF satisfied Germany, which had persistently demanded the IMF’s involvement since the bailout was agreed last summer, Thomsen said the IMF would participate financially in the Greek program later this year.
Sinking as low as 6.98 percent on Wednesday, the yield on Greece’s 10-year bond fell below 7 percent for the first time since November subsequently rising to 7.15 percent.
Dutch Finance Minister Jeroen Dijsselbloem, who chaired the meeting said that despite the agreement, there’s no guarantee that the IMF will join the Greek program. He said that the IMF has its “own rules and procedures to follow so later this year they will make a new debt-sustainability analysis and assess the debt measures we have put on the table and they will come to their opinion.”
The European Stability Mechanism, the euro-area’s crisis-fighting fund, will seek to reduce interest-rate risk without incurring additional costs as a part of the short-term debt relief measures that would kick in before 2018.
“The EU put again temporal political considerations above the long terms interests. There is a real danger that, by the time decisions on Greek debt are made in 2018, interest rates would have risen sharply, eliminating any chance of eventual recovery for Greece,” Nicholas Economides, professor of economics at Stern School of Business, New York University, said.
According to a statement, to cover debt-servicing needs and to clear initial arrears, the aid disbursal will include a 7.5 billion-euro portion that will be released in June. The remainder of the payout will be made after the summer.
(Source:www.bloomberg.com)
