July 14, 2011
European finance ministers are concerned that the International Monetary Fund will curb its share of a Greek rescue of as much as 115 billion euros ($163 billion) unless the plan includes deep cuts in Greece’s debt burden, two people with knowledge of the talks said.
A program that fails to generate a sustainable reduction in Europe’s biggest debt load may require governments to finance a bigger share of the three-year lifeline, said the people, who declined to be named because the talks are in progress. The IMF has provided one third of the three previous euro bailouts, including Greece’s in 2010.
Doubts over the IMF’s role represent an added obstacle in the effort by policy makers to stem a crisis that spread to Italy this week, increasing the urgency for a solution as yields soared to euro-era records in the most debt-laden nations.
“European policy makers still misunderstand market dynamics,” Royal Bank of Scotland Group Plc (RBS) economists led by London-based Jacques Cailloux said in a research note. “We expect the crisis to continue deteriorating and threaten the entire euro area.”
Political leaders are at odds with each other and the European Central Bank over Germany’s demand that investors bear some of the burden even at the risk of Greece being declared in default. Bondholder involvement is the main hurdle to a second lifeline, the people said. Germany pressed to postpone a euro- area summit until that point is settled and the leaders can endorse a full package, they said.
More
No comments:
Post a Comment