IMF’s Greece Stance May Mean Increase in Europe’s Bill: JPM
2015-07-15 11:31:23.692 GMT
By Deborah L Hyde
(Bloomberg) -- The IMF’s report on Greece suggests the fund
will no longer tolerate a fudge of the nation’s debt
sustainability analysis and could mean the entire funding of the
third program comes from euro zone, JPMorgan analyst Malcolm
Barr writes in client note.
* A possible solution would be to lay out changes in the
maturity and interest rates on lending to Greece which are
contingent on nominal GDP growth and progress on structural
reform
* Would require terms that imply a lot of NPV debt relief
compared to the debt’s current terms
* If the euro zone isn’t prepared to do that, the IMF may
decide it can no longer put funds into the Greek program
and the the euro zone would have to foot the bill
* That could include the EU16b that has been penciled in
for the IMF to provide and either buying the IMF’s EU22b
of existing loans to Greece or at least indemnifying the
IMF against losses on those loans
* NOTE: Valdis Dombrovskis, EC vice president for euro policy,
says there’s no prospect for bilateral aid to Greece
For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>
To contact the reporter on this story:
Deborah L Hyde in London at +44-20-3525-4829 or
dhyde10@bloomberg.net
To contact the editors responsible for this story:
Deborah L Hyde at +44-20-3525-4829 or
dhyde10@bloomberg.net
V. Ramakrishnan
2015-07-15 11:31:23.692 GMT
By Deborah L Hyde
(Bloomberg) -- The IMF’s report on Greece suggests the fund
will no longer tolerate a fudge of the nation’s debt
sustainability analysis and could mean the entire funding of the
third program comes from euro zone, JPMorgan analyst Malcolm
Barr writes in client note.
* A possible solution would be to lay out changes in the
maturity and interest rates on lending to Greece which are
contingent on nominal GDP growth and progress on structural
reform
* Would require terms that imply a lot of NPV debt relief
compared to the debt’s current terms
* If the euro zone isn’t prepared to do that, the IMF may
decide it can no longer put funds into the Greek program
and the the euro zone would have to foot the bill
* That could include the EU16b that has been penciled in
for the IMF to provide and either buying the IMF’s EU22b
of existing loans to Greece or at least indemnifying the
IMF against losses on those loans
* NOTE: Valdis Dombrovskis, EC vice president for euro policy,
says there’s no prospect for bilateral aid to Greece
For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>
To contact the reporter on this story:
Deborah L Hyde in London at +44-20-3525-4829 or
dhyde10@bloomberg.net
To contact the editors responsible for this story:
Deborah L Hyde at +44-20-3525-4829 or
dhyde10@bloomberg.net
V. Ramakrishnan