IMF, ECB leave doubts over bond

Limit on debt from Fund and Draghi’s cau­tion cre­ate un­cer­tainty about Greek plans to re­turn to mar­kets

Kathimerini English - - Front Page -

The In­ter­na­tional Mon­e­tary Fund’sEx­ec­u­tive Board was due to ap­prove the or­ga­ni­za­tion’s par­tic­i­pa­tion in the Greek pro­gram “in prin­ci­ple” last night but doubts per­sisted about when Athens might be able to re­turn to the bond mar­kets.

Ahead of the IMF board meet­ing, it emerged in a re­port by The Wall Street Jour­nal that as part of its deal with the Fund, Greece has agreed not to hold more than 325 bil­lion eu­ros in cen­tral gov­ern­ment debt. This would pre­vent Greece from is­su­ing any new debt. It would only be able to rollover ex­ist­ing debt.

It ap­pears that the gov­ern­ment had been con­sid­er­ing swap­ping a five-year bond is­sued in 2014 with a new note ma­tur­ing in 2022 but maybe also rais­ing a small amount on top of the pre­vi­ous is­sue.

Ear­lier, dur­ing a sched­uled press con­fer­ence in Frank­furt, Euro­pean Cen­tral Bank Pres­i­dent Mario Draghi said it was up to the Greek gov­ern­ment to de­cide when it should re­turn to the bond mar­kets, but sug­gested that Athens should avoid rush­ing back and that any trial bond is­sue should be part of a broader strat­egy to re­gain mar­ket ac­cess.

“Is­suance ac­tiv­ity should be part of an over­all strat­egy where you have the com­ple­tion of the third (bailout) pro­gram, and also the re­turn to the mar­ket should be in a last­ing way,” he said in a com­ment that seems to sup­port the po­si­tion taken by Bank of Greece Gov­er­nor Yan­nis Stournaras.

The head of Greece’s cen­tral bank told The Wall Street Jour­nal last week that he thinks it is too early for a bond is­sue now and that the gov­ern­ment would be bet­ter off pro­ceed­ing with some sig­nif­i­cant pri­va­ti­za­tions to build con­fi­dence from in­vestors.

“The sound im­ple­men­ta­tion of the pro­gram and credibility are es­sen­tial, how­ever, for restor­ing mar­ket con­fi­dence, and we have to take note that the na­tional cen­tral bank has ex­pressed some con­cern about that; al­though there has been se­ri­ous progress in place in Greece through­out the last sev­eral months,” Draghi told re­porters yes­ter­day.

Ear­lier, gov­ern­ment spokesman Dim­itris Tzanakopou­los in­sisted that the coali­tion wants any bond is­sue to con­trib­ute to the ef­fort to exit the pro­gram next Au­gust.

“The gov­ern­ment’s de­ci­sion is re­lated to... a com­pre­hen­sive strat­egy and prepa­ra­tion to en­sure that in Au­gust 2018 we will have re­gained mar­ket ac­cess,” he said, adding that this would de­ter­mine when Greece tries to is­sue its first bond since 2014.

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