Euro chiefs claim progress on Greece, seek to per­suade ECB

The Pak Banker - - Front Page -

ATHENS

Euro-area fi­nance min­is­ters will push the In­ter­na­tional Mon­e­tary Fund and cen­tral bankers to en­dorse new plans to save Greece from the fis­cal abyss, seek­ing to over­come the lat­est im­passe in the debt cri­sis and restart aid pay­ments to Athens.

Fi­nance chiefs will brief the IMF and Euro­pean Cen­tral Bank on “fur­ther con­ces­sions” that would plug Greece’s deficit gap with­out forc­ing a write­off of of­fi­cial loans, Aus­tria’s Maria Fek­ter said to­day be­fore the min­is­ters’ fourth round of talks on the Greek cri­sis in two weeks.

IMF crit­i­cism of Europe’s fail­ure to put Greece’s debt on a “sus­tain­able” path has held up an ac­cord on an up­dated fi­nanc­ing package, nar­row­ing the op­tions for patch­ing up the debt­stricken coun­try draw­ing on 240 bil­lion eu­ros ($ 311 bil­lion) in of­fi­cial loans awarded since 2010.

A deal is “prac­ti­cally fi­nal­ized, there are just a few cen­time­ters to go,” French Fi­nance Min­is­ter Pierre Moscovici said. “Con­sen­sus is within reach if we are ca­pa­ble of seiz­ing it. If ev­ery­one is rea­son­able, we can do it quite quickly.” IMF crit­i­cism of Europe’s fail­ure to put Greece’s debt on a “sus­tain­able” path has held up an ac­cord on an up­dated fi­nanc­ing package, nar­row- ing the op­tions for patch­ing up the debt­stricken coun­try draw­ing on 240 bil­lion eu­ros ($311 bil­lion) in of­fi­cial loans pledged since 2010.

“We’re go­ing to try to work for a so­lu­tion that is cred­i­ble for Greece,” IMF Man­ag­ing Di­rec­tor Chris­tine La­garde said as she en­tered the meet­ing. A so­lu­tion is hung up on pol­i­tics in Ger­many, the dom­i­nant coun­try in Europe’s cri­sis man­age­ment, where Chan­cel­lor An­gela Merkel is cam­paign­ing for a third term next year on the pledge that Greece won’t cost tax­pay­ers an ad­di­tional cent. On the way in to to­day’s meet­ing, Ger­man Fi­nance Min­is­ter Wolf­gang Schaeu­ble dis­missed warn­ings by the IMF and some ECB of­fi­cials that for­give­ness of part of the of­fi­cial debt is the only way out for Greece. Fin­land and the Nether­lands, also with top credit rat­ings, balk at debt re­lief as well.

“It’s non­sense to cre­ate a typ­i­cal Ger­man prob­lem out of it,” Schaeu­ble said. “It’s a prob­lem of the euro area that ev­ery­one says that the con­struc­tion that was cre­ated for the Euro­pean res­cue um­brel­las is not com­pat­i­ble with a debt cut. The ECB has been say­ing ex­actly the same.”

Fi­nance min­is­ters are deal­ing with the con­se­quences of a Nov. 12 de­ci­sion to give Greece two ex­tra years, un­til 2016, to cut its bud­get deficit, an ad­mis­sion that the aus­ter­ity-first pre­scrip­tion for solv­ing the cri­sis is stran­gling its econ­omy. At an overnight ses­sion last­ing more than 11 hours a week later, the min­is­ters failed to fill the re­sult­ing fi­nanc­ing gap or show that Greek debt would drop to a tar­get of 120 per­cent of gross domestic prod­uct by 2020, a con­di­tion set by the IMF. They con­sulted again on Nov. 24 by tele­con­fer­ence. “I want to en­cour­age all the euro- area mem­ber states and the IMF to go the last mile in or­der to find an agree­ment, in fact go the last cen­time­ter be­cause we’re so close to an agree­ment,” Euro­pean Union Eco­nomic and Mon­e­tary Com­mis­sioner Olli Rehn said.

Greek debt is set to peak at 190 per­cent of GDP in 2014. An op­tion un­der con­sid­er­a­tion last week was to raise the debt tar­get to 124 per­cent of GDP in 2020, a Greek of­fi­cial said on Nov. 22. A deal would pave the way for a pay­out of at least 31 bil­lion eu­ros that Greece has been wait­ing for since June.

“It wouldn’t be a good so­lu­tion for Europe if we didn’t have the rest of the world on board, in­clud­ing the IMF,” Lux­em­bourg Fi­nance Min­is­ter Luc Frieden said.

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