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Athens Macedonian News Agency: News in English, 15-07-09

Athens News Agency: News in English Directory - Previous Article - Next Article

From: The Athens News Agency at <http://www.ana.gr/>

CONTENTS

  • [01] Schaeuble: IMF right but debt 'haircut' for Greece is not on the cards
  • [02] IMF: Recent turmoil will 'exact heavy toll' on economic activity in Greece

  • [01] Schaeuble: IMF right but debt 'haircut' for Greece is not on the cards

    BERLIN (ANA-MPA/ F. Karaviti) Greece must present a specific plan of prior actions in order to secure its partners' support, German Finance Minister Wolfgang Schaeuble said on Thursday, expressing doubts whether these can be carried out by Sunday. He admitted that the International Monetary Fund (IMF) was right to say that Greece's debt was not sustainable without a "haircut" but ruled out this possibility on the grounds that it violates EU rules. "If Greece wants to restore trust, then it must carry out reforms," Schaeuble told a Bundesbank conference in Frankfurt, where his French counterpart Michel Sapin was also speaking, adding that Athens had "done nothing". Regarding the capital controls imposed in Greece, he said it was unknown when these will be lifted, adding that it could be some time. "We cannot transfer the risk of a government to a community," he said, stressing that banking risks must be isolated from the main dangers. "Already since 2012 we went further than the IMF...the margins we have due to the restructuring or reprofiling of the debt are very small and in the next few days we will discuss whether there is still such an option. But I am more cautious on this than Michel Sapin," he said. However, he did say that new Greek Finance Minister Euclid Tsakalotos was "more conventional than his predecessor" and that in his first meeting, he told Tsakalotos to "just do it!" and press ahead with reforms.

    [02] IMF: Recent turmoil will 'exact heavy toll' on economic activity in Greece

    ANA-MPA -- Economic activity in Greece will be dealt a severe blow by recent events in the country, which led to an extended bank holiday and capital controls, according to an International Monetary Fund World Economic Outlook report presented in Washington on Thursday. The IMF's ougoing chief economist Olivier Blanchard said forecasts for global growth had been revised downward since April, to 3.3 pct instead of 3.5 pct, but were unchanged for 2016. In Greece, the IMF said that the referendum and bank holiday, combined with increased uncertainty and the nature of future support for the country from the international community, had led to a significant increase in spreads for Greek state bonds, especially for short-term bonds. Outside the country, the impact of the crisis appeared to be limited and the reactions of financial markets were muted, restricted to a moderate increase in the prices of state bonds considered a safe haven, the report said. It noted that the turmoil in Greece had not so far led to any significant 'contagion' for other sovereigns but warned that this possibility could not be fully discounted and calling for "prompt measures" for the management of such risks if they arose. Prospects for recovery within the euro area appeared good, according to the IMF, with rising domestic demand and inflation. Greece was an exception since the developments underway were expected to exact a heavy toll on economic activity compared with initial forecasts, which had predicted growth rates of 2.9 pct this year. The IMF did not offer any estimate of the expected impact, however.

    An agreement between Greece and its lenders will require tough decisions from both sides, Blanchard said. He noted that a deal demands actions on both the fiscal and structural field, while on the side there should be a clear funding plan and debt relief. Blanchard rejected the possibility of the fund accepting an extension for the repayment of Greece's loan obligations, saying that many IMF member-states are poorer than Greece but they've never received similar concessions. "To the degree that there are arrears, this too has consequences. We cannot just extend them without a programme," he added.


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