Courtesy of Mish.
Yet another Greek debt cliffhanger is in the works.
After eight hours of intense negotiations, Greece, EU creditors, and the IMF did not reach agreement on restructuring Greek Debt.
However, a big debt repayment does not come until July so negotiations will drag on and on. In the past, there was always a last minute deal. Will it be any different this time?
Bloomberg reports Greek Deal on Debt Relief Founders as Talks Stretch to June.
After nearly eight hours of talks and multiple draft compromises, Athens and its creditors couldn’t reach an accord that would ease Greece’s debt and that would convince the International Monetary Fund to agree to help finance the country’s bailout.
The IMF has been seeking more debt relief for the country, pushing euro-area creditors to ensure the sustainability of Greece’s 315 billion euros ($354 billion) of obligations before it participates in the program. Some nations including Germany object to a debt restructuring while also insisting that the Washington-based fund join the program to lend credibility to the bailout.
Greek and EU officials said that a proposed final compromise was considered too vague by the Athens delegation, which rejected the draft plan arguing it wouldn’t bring sufficient certainty on the country’s debt prospects.
Greece doesn’t have a large maturity deadline until July, when about 7 billion euros in obligations come due, but delaying the resolution of the program review adds to months of uncertainty that have taken their toll on the Greek economy — which has slipped back into recession — and kept the country from returning to the bond market.
The IMF and Germany disagreed over Greece’s economic outlook and the amount of debt relief required to assure economic stability, according to two European Union officials with knowledge of the talks, who asked not to be identified because the discussion was private.
A key issue of contention is the forecast for Greece’s economy after 2018, when the current bailout expires. The IMF has raised doubts about Greece’s ability to maintain such an optimistic budget performance for decades, while key creditors have been pushing for a more positive outlook. Less ambitious fiscal targets would increase the amount of debt relief needed.
Greece Back in Recession
Even if Greece was not in a recession there is no Greece can pay back what is owed.
Germany knows that full well, but it cannot give Greece any relief, especially with national elections coming up.
Has Anything Changed?
