28 Apr 2016
Greece: More time needed to craft a compromise - ING
Paolo Pizzoli, Senior Economist at ING, notes that there’s no agreement yet in Greece, as the parties remain far apart on divisive contingency measures requested by the IMF to fill the primary balance gap foreseen for 2018.
Key Quotes
“More delays. Hopes that this week could see the first review of the third Greek programme wrapped up were turned down on Tuesday night by a tweet of the Eurogroup spokesperson, in which he announced that no extraordinary meeting of the Eurogroup would take place on Thursday (today), as more time was needed.
All in all, recent developments of the Greek saga show that the political and economic cost of keeping the IMF on board can be higher than expected. Still, we do not see the European institutions heading for an extreme clash with the IMF on the Greek review.
In our view the IMF will not backtrack from its gap-filling requests, but will likely show some flexibility on the way that contingency measures will be crafted. There is still room for a compromise, and all players have to make good use of it. A quick solution to the impasse would help to avoid an excessive concentration of risks late in June (the Brexit referendum in primis) and would help Greece better manage the liquidity constraints which are already emerging, but that will become intolerably biting late in July.”
Key Quotes
“More delays. Hopes that this week could see the first review of the third Greek programme wrapped up were turned down on Tuesday night by a tweet of the Eurogroup spokesperson, in which he announced that no extraordinary meeting of the Eurogroup would take place on Thursday (today), as more time was needed.
All in all, recent developments of the Greek saga show that the political and economic cost of keeping the IMF on board can be higher than expected. Still, we do not see the European institutions heading for an extreme clash with the IMF on the Greek review.
In our view the IMF will not backtrack from its gap-filling requests, but will likely show some flexibility on the way that contingency measures will be crafted. There is still room for a compromise, and all players have to make good use of it. A quick solution to the impasse would help to avoid an excessive concentration of risks late in June (the Brexit referendum in primis) and would help Greece better manage the liquidity constraints which are already emerging, but that will become intolerably biting late in July.”