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IMF Will Not Provide More Financial Aid For Greek

According to Frankfurter Allgemeine Zeitung it is almost sure that the IMF will not be able to continue to pay for Greece after June 29 and that three options are being discussed, one of which – the bankruptcy of Greece – is wanted by no one.


“It is our understanding that the EU is currently considering alternative options of a private sector involvement than a maturity transformation – which would trigger ratings downgrades and possibly a loss of access to ECB financing.”





The second option is to use the Commission’s EFSM to take over the billions the IMF would have paid for otherwise. The advantage would be, from Angela Merkel‘s point of view, that it involves no votes of national parliaments.


A third option would be another adjustment program with yet more conditionality attached to it.
The article says the latter is option will be discussed at a technical level in Brussels today, but no immediate decisions are expected.

It is far from certain that Merkel will get a majority for that in Bundestag for such a package. And there remains the disagreement whether any such package should be accompanied by a private sector involvement.

The Wall Street Journal’s
reports from Berlin that Germany is considering dropping its push for an early rescheduling of Greek debt.
The article quote unnamed officials in Berlin who express hope that a deal could be reached with Athens to render this step unnecessary.

Financial Times Deutschland, by contrast, reports that some central banks no longer exclude a voluntary restructuring – provided it does not trigger a negative chain reaction on the markets.

It seems like the conflicting news reports somewhat reflect the confusion that currently reigns in European capitals, as the system finds it, once again, hard to cope with actual crisis management, eurointelligence.com points out. 

“It is our understanding that the EU is currently considering alternative options of a private sector involvement than a maturity transformation – which would trigger ratings downgrades and possibly a loss of access to ECB financing.”

Meanwhile, European leaders seem to have agreed that Greece can cut its VAT rate from 23% to 20% in a move designed to win support for the new austerity package from opposition parties.

But Greece’s conservative opposition party said on Tuesday that a VAT cut was not enough to win its support, Reuters reports.

An official at the new Democracy Party says: “If correct, it is a good step but not good enough, not sufficient to restart the economy…The corporate tax and personal income tax cuts we suggested would have more impact, less cost and no immediate cash flow impact.”

The VAT deal is not confirmed yet, and the so-called ”troika” is expected to complete its mission to Athens late this week and then produce its review of the government’s progress towards meeting its deficit targets.

German Handelsblatt writes that the Greek have warmed to the idea of creating an independent Treuhand charged with implementing the privatization program. While the principle of this idea seems to be agreed it is still unclear if the representatives of the EU, the ECB or the IMF will be directly involved in this.

 About 50,000 people gathered in central Athens, in a seventh consecutive day of anti-austerity protests.
Banging cooking pots, protesters held a banner in front of parliament reading: “We won’t go away until the government, the troika and the debt leave.”

Last night in Athens, a trickle of protesters stopped the traffic outside parliament building on Syntagma Square. Less than an hour later they were numbered in their thousands, chanting “thieves, thieves, thieves”.


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