| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

Home 
 
 News
 Irish
 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 International
 Property
 Innovation
 
 Analysis/Comment
 
 Asia Economy

RSS FEED


How to use our RSS feed

Follow Finfacts on Twitter

 
Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.

Welcome

Finfacts is Ireland's leading business information site and you are in its business news section.

Links

Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Irish Economy

Global Income Per Capita

Global Cost of Living

Irish Tax - Income/Corporate

Global News

Bloomberg News

CNN Money

Cnet Tech News

Newspapers

Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News

 

Feedback

 

Content Management by interactivetools.com.

News : EU Economy Last Updated: Jul 15, 2011 - 8:59 AM


IMF says temporary Greek default likely if private participation in new bailout program
By Finfacts Team
Jul 14, 2011 - 5:13 AM

Email this article
 Printer friendly page
IMF Definition: The structural primary balance is the recorded fiscal balance minus two components: (1) interest payments, which cannot be directly reduced in the short run by fiscal policy, and (2) that part of the recorded balance that results from the phase of the business cycle (for example, the amount the government pays out in unemployment benefits during a recession, or the amount of windfall tax revenue during boom times).

A temporary Greek default is likely if private bondholders voluntarily participate in a new bailout program that is currently being discussed, the International Monetary Fund said Wednesday. The IMF has pencilled in €33bn of private sector burden-sharing through 2014 and says such an approach is "appropriate."

"There will be some form of PSI," Poul Thomsen, deputy director of IMF's European Department and mission chief to Greece said Wednesday in a teleconference call with journalists, referring to private sector involvement.

Christine Lagarde, managing director of the Fund said in a statement on Monday following the Eurogroup meeting of Eurozone finance ministers: “We...welcome the Ministers’ recognition of the need for a broader, more forward-looking policy response to assist Greece in its efforts to restore growth and competitiveness, and to bolster debt sustainability.  The IMF will continue to work closely with Greece and European partners to support these objectives.”

In a staff report (pdf) published on Wednesday, the IMF said if the authorities are able to implement their "very ambitious fiscal and privatization programs, public debt would peak at 172% of GDP in 2012 and decline to 130% of GDP by end-2020 (compared with 159 and 130% of GDP at the third review)." The higher peak relates to higher estimated upfront FSF (financial stability fund) funding needs.

The report says open discussions of Greece’s financing challenge and Eurozone countries’ insistence on private sector involvement to resolve this have convinced markets that Greece will restructure its debt. The latest market surveys suggest that about 95% of participants expect this outcome.

The IMF said the fiscal position has stalled at a primary deficit of around 3½%, as progress with underlying reforms has lagged behind.

The report acknowledged that only the threat of wider financial contagion allowed the IMF to keep lending to a country with such an unstable debt situation.

Rating agencies have said that any private sector involvement in burden sharing, even if it is voluntary, would trigger a selective default on Greek debt. Any such default would have to be short as Greek banks use the sovereign debt they hold as collateral to borrow from the European Central Bank.

The IMF warned against further delays in agreeing a new deal.

"The uncertainty has affected market conditions unfavorably, there's no doubt about that, and there is an urgency to coming to a conclusion on this issue," Thomsen said on his teleconference call.

On Wednesday, Fitch, the US rating agency, downgraded Greek debt, citing the uncertainty surrounding private sector involvement.

Default: Viable Option?:

Related Articles
403 Forbidden

Forbidden

Execute access is denied.


© Copyright 2011 by Finfacts.com

Top of Page

EU Economy
Latest Headlines
Eurozone manufacturing PMI at 13-month low in August
UK manufacturing exports orders dip; Germany drags down Eurozone's prospects
Eurozone unemployment unchanged at 11.5% in July
Eurozone annual inflation fell to near 5-year low in August
Eurozone needs growth plan; Business lending cut by €573bn since 2009
Business confidence fell in the Eurozone in August
ECB hires BlackRock Solutions to advise on bond buying
German consumer confidence in biggest plunge since at least 1980
In 2013 China alone received more FDI inflows than all EU countries together
Germany feels slight chill from sanctions on Russia
Eurozone recovery weakens in August, as France stabilises
France confirms €50bn in spending cuts in 2015-17 despite stagnation
Eurozone inflation "more or less" at a trough
German Industry: Engine spluttering but not expected to stall
Eurozone annual inflation confirmed at 0.4% in July
Eurozone growth stagnated in second quarter of 2014
German GDP shrank in Q2 2014; France stagnated; Greece returned to growth
"Made in Germany" piracy big threat to German business
Industrial production dipped again in Eurozone in June contrary to PMI surveys
Over 1,000 African migrants try to enter Spain in 2 days
ZEW Indicator of Economic Sentiment for Germany fell sharply in August
Eurozone second quarter GDP report expected to be bleak
Eurozone retail sales fall in July as downturns in France and Italy deepen
German outlook for H2 2014 bleak according to Deutsche Bank
German imports rose at their fastest rate in over three years in June
ECB and Bank of England keep benchmark interest rates at record lows
79% of Germany's trade surplus in 2013 with 5 non-euro countries + France, Austria
European government bond yields at historical lows; Dutch rate lowest in 500 years
German business confidence dropped in June to lowest level since October
Eurozone economic growth accelerated in July; France remained in red zone
France opens tax evasion probe of UBS; Swiss invite India to discuss tax dodger list
FDI into western Europe declined between March and May 2014
Eurozone annual inflation stable at 0.5% in June - down from 1.6% in 2013
Eurozone construction activity fell in May
Eurozone is recovering; Deep-seated obstacles to growth remain says IMF
German economic sentiment fell for seventh straight time in July 2014
Industrial production down by 1.1% in Eurozone and EU28 in May
French industrial production plummeted in May
Germany's exports, imports and industrial production fell in May
European industrialist urges ECB to tackle “crazy” strength of euro