Editor: Johnathan Meyers | Tactical Investor
Greek Debt And European Disorder
The result is that the IMF still helps monitor the program to satisfy countries like Germany and the Netherlands. Yet it refuses to commit new funding until debt sustainability has been assured, via far deeper debt relief than the EU is willing to consider—particularly during a crucial electoral period.
But this fudge creates a recurring problem. Greek debt sustainability—and, ultimately, its place in the euro—comes into sharper focus every time we approach a program review, which normally precedes the release of fresh funding. That’s exactly what happened in the first review last spring and it’s happening again now during the second review.
Last year, it ended with a compromise. This year, regional leaders know they must prevent things from coming to a head. With Dutch, French and German elections on the horizon, Brexit negotiations about to start and uncertainty from the Trump administration, the last thing EU leaders need is another full-blown Greek crisis.
Reaching a compromise won’t be easy. Greece wants the second review completed as soon as possible. However, the gaps between Greece, the EU and the IMF remain wide. Indeed, there’s still a fundamental disagreement between the EU and the IMF on debt sustainability, the need for debt relief and overall program design. Full Story
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