#Grexit is back..IMF uncertain on Greek debt
Fresh worries over Greece’s debts have pushed the country’s borrowing costs sharply higher amid renewed insistence from Athens it will not swallow further austerity demands from international lenders.
The yields on two-year government bonds jumped to their highest level since last June and went above 10% to reflect growing anxiety on financial markets over Greece’s ability to keep up to date with debt repayments. Yields on 10-year government bonds were also higher at above 7.8%, the highest close since November.
The renewed focus on Greece’s debts came as the International Monetary Fund revealed its board was split over how far spending cuts in the country should go, raising fresh doubts over its participation in rescue plans for the struggling Greek economy.
The Washington-based fund has made repeated warnings that Greece’s debt burden of about €330bn (£280bn) is unsustainable despite the government pushing through spending cuts and tax increases that have badly hit popularity ratings for the government of prime minister Alexis Tsipras.
The IMF declined to join other international lenders – the European Central Bank and the European Union – in funding the country’s third bailout, agreed in August 2015, and it is currently deciding whether to take part in a new chunk of rescue funds needed by mid-2018. Germany has warned the IMF’s involvement is crucial if support for Greece is to continue.
News of a split on the IMF board raised new questions over whether Germany will see its wish granted for the fund joining the next rescue. In its latest annual review of the Greek economy, the IMF revealed that its board members were in disagreement over whether Athens should enforce even more austerity to satisfy its lenders.
Most of the 24-strong group agreed that Greece was on track to achieve a primary surplus of 1.5% of GDP, and should not make further cuts. However, another group on the board argued that Athens needed to tighten further to push its surplus up to 3.5% of GDP, the level agreed in its last bailout. A primary surplus refers to a government’s income exceeding its spending, excluding debt interest payments.
In a rare admission of an internal split, the IMF said: “Most executive directors agreed with the thrust of the staff appraisal while some directors had different views on the fiscal path and debt sustainability.”
lets be honest here..it never went away..it was a rescue bandaid measure to stop the EU falling apart..but its still there..the great big blob of debt..
“The Washington-based fund has made repeated warnings that Greece’s debt burden of about €330bn (£280bn) is unsustainable despite the government pushing through spending cuts and tax increases that have badly hit popularity ratings for the government of prime minister Alexis Tsipras.”
they might have to split greece into “bad” greece and “good” greece..and pray “bad” greece just melts away..but it wont..