Tuesday, June 7, 2011

IMF open to delayed Greek loan payments if private banks pony up

The IMF is open to giving Greece another bailout and allowing the underwater nation to delay loan payments. Greece has already won a deferred payment plan from it Eurpean Union creditors. The Greek parliament is expected to vote later this month on it's current medium-term austerity plan.
Greek sovereign debt totals €340 billion, or about 150% of GDP.
Details of the new deal to supersede the May, 2010 rescue have yet to be hammered out, but it assumes Greece's funding needs will be covered by a mix of new EU and IMF loans, budget deficit cuts including tax increases and state asset sales, and a "voluntary" participation by private creditors.

One possibility is that creditors would agree to buy new Greek bonds when old ones they hold mature, meaning that Athens would not have to produce the cash up front.

The managing director of ratings agency Moody's sovereign risk group said today it was hard to see how a private sector rollover of Greek debt would be truly voluntary and it would therefore likely constitute a default.
-Irish Times