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Debt campaigners criticise IMF over Greek deal - live updates Debt campaigners criticise IMF over Greek deal - live updates
(35 minutes later)
1.33pm BST
13:33
The European Central Bank holds its regular meeting next week and some are hoping that it will discuss reintroducing a waiver to allow the central bank to accept Greek bonds (as UniCredit suggested below). FastFT reports (£):
Greek officials are optimistic that the eurozone’s top monetary policymakers will take a big step towards rehabilitating the country’s banking system next week, by deciding to accept Greek bonds as collateral for the European Central Bank’s loans for the first time in more than a year.
The ECB’s governing council...will meet next Thursday in Vienna. Officials are likely to use the Vienna meeting to discuss whether to reintroduce a waiver that allows the eurozone’s central bank to accept Greek debt in its regular auctions of central bank cash. Athens is confident that the council will support the reintroduction of the waiver.
The waiver was scrapped in February 2015 as the crisis escalated.
Updated
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Someone else who thinks Germany gave the least ground at the marathon Eurogroup meeting, given the delay on any major decisions on debt. Economist Tullia Bucco at UniCredit Research said:
In our view, there are two important features in this framework that are intended to provide reassurance to the European creditors for which Greece poses a thorny political issue: 1. The bulk of the debt-relief measures will only be granted at the end of the program in 2018, if necessary, and 2. Long-term relief measures remain very vague.
All in all, Germany can be considered to be the winner of the negotiations, given that any major decision on debt relief will only be taken after next year’s general elections, whereas the IMF committed to participate financially to the program already before the end of 2016.
The agreement could also pave the way to returning Greek banks to some kind of normality:
Last but not least, we think that the deal would soon allow the ECB to reinstate the waiver for Greek bonds posted as collateral at its refinancing operations. This is good news for Greek banks.
Updated
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1.13pm BST
13:13
There were some tired faces at today’s ECOFIN meeting, among ministers who worked late into the night on the Greek agreement.
Greece’s finance minister, Euclid Tsakalotos, looked positively pensive at one point:
Tsakalotos also had an expressive chat with Pierre Moscovici, EU Commissioner for Economic Affairs...
1.04pm BST1.04pm BST
13:0413:04
All sides made some concessions at last night’s Eurogroup meeting, but it does seem that Germany gave the least ground.All sides made some concessions at last night’s Eurogroup meeting, but it does seem that Germany gave the least ground.
Writing for Macropolis, the Greek analysis site, Yiannis Mouzakis explains:Writing for Macropolis, the Greek analysis site, Yiannis Mouzakis explains:
German Finance Minister Wolfgang Schaeuble is probably the one participant in the Eurogroup that completely achieved his objective. His only concession is that he had to compromise on his initial stance that Greece’s debt does not need to be discussed before 2023.German Finance Minister Wolfgang Schaeuble is probably the one participant in the Eurogroup that completely achieved his objective. His only concession is that he had to compromise on his initial stance that Greece’s debt does not need to be discussed before 2023.
There is nothing in this agreement to make him uncomfortable beyond that. It does not require any major changes to the programme’s modalities, the targets remain, large-scale debt measures are not due to happen until after the German elections in autumn next year and the IMF has committed that it will go to its board with a recommendation to participate in the Greek programme with financing and a new programme that will ensure policing of compliance and reform implementation.There is nothing in this agreement to make him uncomfortable beyond that. It does not require any major changes to the programme’s modalities, the targets remain, large-scale debt measures are not due to happen until after the German elections in autumn next year and the IMF has committed that it will go to its board with a recommendation to participate in the Greek programme with financing and a new programme that will ensure policing of compliance and reform implementation.
Yiannis also cautions that today’s deal could turn sour in a few months, particularly if the IMF concludes that Greece’s debt relief doesn’t go far enough.Yiannis also cautions that today’s deal could turn sour in a few months, particularly if the IMF concludes that Greece’s debt relief doesn’t go far enough.
Here’s the piece: A Eurogroup deal that might be hard to stomachHere’s the piece: A Eurogroup deal that might be hard to stomach
12.36pm BST12.36pm BST
12:3612:36
The mood in AthensThe mood in Athens
Helena SmithHelena Smith
Over in Greece, the government’s supporters have hailed the eurogroup deal.Over in Greece, the government’s supporters have hailed the eurogroup deal.
Opponents, though, have dismissed it - and argued that Greece must leave the euro.Opponents, though, have dismissed it - and argued that Greece must leave the euro.
Our Athens correspondent, Helena Smith, reportsOur Athens correspondent, Helena Smith, reports
The sense of déjà vu – the underlying current of this six-year crisis – was in full play this morning, in the media, on the streets and in the commentary of politicians, trade unionists and businessmen, the actors in the drama.The sense of déjà vu – the underlying current of this six-year crisis – was in full play this morning, in the media, on the streets and in the commentary of politicians, trade unionists and businessmen, the actors in the drama.
While pro-government newspapers lauded the “white smoke” that had finally appeared at the end of a gruelling 11-hour euro group, opposition newspapers slammed it as a sham.While pro-government newspapers lauded the “white smoke” that had finally appeared at the end of a gruelling 11-hour euro group, opposition newspapers slammed it as a sham.
Avgi, mouthpiece of prime minister Alexis Tsipras’ leftist Syriza party, enthused:Avgi, mouthpiece of prime minister Alexis Tsipras’ leftist Syriza party, enthused:
“The review has been concluded, roadmap [agreed] for the debt.”“The review has been concluded, roadmap [agreed] for the debt.”
The paper quoted Syriza’s prominent MEP Dimitris Papadimoulis as saying Athens had finally moved on from vagaries to concrete plans regarding the country’s staggering debt pile.The paper quoted Syriza’s prominent MEP Dimitris Papadimoulis as saying Athens had finally moved on from vagaries to concrete plans regarding the country’s staggering debt pile.
“We are no longer speaking about the debt in general, vague terms but have a framework of an agreement, a concrete roadmap,” he said of the decision to deal with debt load in three stages, adding:“We are no longer speaking about the debt in general, vague terms but have a framework of an agreement, a concrete roadmap,” he said of the decision to deal with debt load in three stages, adding:
“It’s a good decision that allows us to turn the page.”“It’s a good decision that allows us to turn the page.”
On the streets, however, enthusiasm was remarkably muted. Shopkeepers shrugged off any suggestion that Greece was about to turn the corner.On the streets, however, enthusiasm was remarkably muted. Shopkeepers shrugged off any suggestion that Greece was about to turn the corner.
“It might bring some stability,” said Panos Tsekouras who runs a textile store in the heart of downtown Athens. “We won’t see the drama of last year but once the summer is over and the taxes have piled up who is going to pay the bill? There’ll be mayhem.”“It might bring some stability,” said Panos Tsekouras who runs a textile store in the heart of downtown Athens. “We won’t see the drama of last year but once the summer is over and the taxes have piled up who is going to pay the bill? There’ll be mayhem.”
Opposition politicians from the left and right described the deal as a fiasco.Opposition politicians from the left and right described the deal as a fiasco.
Speaking to the Guardian, Panaghiotis Lafazanis, the former energy minister who broke ranks with Syriza to set up the breakaway anti-austerity Popular Unity party, predicted it would be only a matter of time before there was widespread reaction when the government tried to enforce new taxes and cuts.Speaking to the Guardian, Panaghiotis Lafazanis, the former energy minister who broke ranks with Syriza to set up the breakaway anti-austerity Popular Unity party, predicted it would be only a matter of time before there was widespread reaction when the government tried to enforce new taxes and cuts.
Lafazanis told me:Lafazanis told me:
“It won’t be able to enforce the measures it has agreed to. This is an agreement that solves no problems and on the contrary creates new ones.“It won’t be able to enforce the measures it has agreed to. This is an agreement that solves no problems and on the contrary creates new ones.
Greece, simply, cannot survive in this currency. There will be a disorderly default and ultimate exit from the euro that will be all the worse for not being planned.”Greece, simply, cannot survive in this currency. There will be a disorderly default and ultimate exit from the euro that will be all the worse for not being planned.”
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Austria’s finance minister, Hans Jörg Schelling, hopes that the eurozone will avoid a summer of Greek debt drama.Austria’s finance minister, Hans Jörg Schelling, hopes that the eurozone will avoid a summer of Greek debt drama.
Austrian Fin Min #Schelling: "I value the Greek summer - but not in Brussels." #Eurogroup #Greece #Eurozone -- @dpa.Austrian Fin Min #Schelling: "I value the Greek summer - but not in Brussels." #Eurogroup #Greece #Eurozone -- @dpa.
12.24pm BST12.24pm BST
12:2412:24
Analyst Wolfango Piccoli of Teneo Intelligence is concerned that Greece hasn’t won the solid commitments which prime minister Alexis Tsipras has promised.Analyst Wolfango Piccoli of Teneo Intelligence is concerned that Greece hasn’t won the solid commitments which prime minister Alexis Tsipras has promised.
That may make it harder for Tsipras to hold his small parliamentary majority together, and implement the unpopular austerity measures it has agreed to.That may make it harder for Tsipras to hold his small parliamentary majority together, and implement the unpopular austerity measures it has agreed to.
Here’s Wolf’s key points:Here’s Wolf’s key points:
UpdatedUpdated
at 12.37pm BSTat 12.37pm BST
12.00pm BST12.00pm BST
12:0012:00
The Greek agreement is part of a broader strategy to avoid rocking the boat until Britain’s EU referendum is over, argues my colleague Jonathan Freedland.The Greek agreement is part of a broader strategy to avoid rocking the boat until Britain’s EU referendum is over, argues my colleague Jonathan Freedland.
He writes:He writes:
Whatever the rights and wrongs of the [Greek] austerity argument, Cameron has wanted the issue to go away – at least for another month. Today’s bailout loan has achieved that.Whatever the rights and wrongs of the [Greek] austerity argument, Cameron has wanted the issue to go away – at least for another month. Today’s bailout loan has achieved that.
Related: The Greek bailout shows the EU is on its best behaviour – until 24 June | Jonathan FreedlandRelated: The Greek bailout shows the EU is on its best behaviour – until 24 June | Jonathan Freedland
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at 12.02pm BSTat 12.02pm BST
11.28am BST11.28am BST
11:2811:28
Moody's: Greek deal is credit positiveMoody's: Greek deal is credit positive
Rating agency Moody’s has just announced that the Greek deal is “credit-positive”.Rating agency Moody’s has just announced that the Greek deal is “credit-positive”.
Moody’s says the promise of €10.3bn of bailout loans alleviates the danger that the country defaults this summer.Moody’s says the promise of €10.3bn of bailout loans alleviates the danger that the country defaults this summer.
It also welcomes the “road map” on debt relief agreed by creditors, although it is light on details.It also welcomes the “road map” on debt relief agreed by creditors, although it is light on details.
Although the announcement doesn’t provide specifics on the type of relief, it is clear that material relief will be considered only after the program expires in 2018 and remains contingent on the Greek governments’ ability to implement successfully the conditions associated with the program.Although the announcement doesn’t provide specifics on the type of relief, it is clear that material relief will be considered only after the program expires in 2018 and remains contingent on the Greek governments’ ability to implement successfully the conditions associated with the program.
However, the agency is also concerned that Athens will struggle to implement the measures agreed with creditors.However, the agency is also concerned that Athens will struggle to implement the measures agreed with creditors.
We consider implementation risks in Greece to remain high, given the small governing majority, weak institutions, and the backdrop of political and social discontent.”We consider implementation risks in Greece to remain high, given the small governing majority, weak institutions, and the backdrop of political and social discontent.”
It's official: Can-kicking = good https://t.co/oDAY6oQxrAIt's official: Can-kicking = good https://t.co/oDAY6oQxrA
UpdatedUpdated
at 11.34am BSTat 11.34am BST
11.19am BST11.19am BST
11:1911:19
Mihir Kapadia, CEO at Sun Global Investments, is relatively upbeat about the deal:Mihir Kapadia, CEO at Sun Global Investments, is relatively upbeat about the deal:
The Eurozone provided Greece with a firm offer of debt relief yesterday at a meeting of finance ministers in Brussels, a decision which could see the Euro provide €10bn in new funds for the country. The IMF seems to have softened its stance significantly from its hard line position as it had previously insisted that Greece’s proposed programme did not offer a path to fiscal sustainability.The Eurozone provided Greece with a firm offer of debt relief yesterday at a meeting of finance ministers in Brussels, a decision which could see the Euro provide €10bn in new funds for the country. The IMF seems to have softened its stance significantly from its hard line position as it had previously insisted that Greece’s proposed programme did not offer a path to fiscal sustainability.
The positive conclusions to these talks are a good sign on a number of fronts – showing flexibility by the IMF and European ministers, and some early signs of improving confidence in Greece. Greek 10-year bond yields fell below 7% this morning for the first time since November 2015.”The positive conclusions to these talks are a good sign on a number of fronts – showing flexibility by the IMF and European ministers, and some early signs of improving confidence in Greece. Greek 10-year bond yields fell below 7% this morning for the first time since November 2015.”
11.12am BST
11:12
We’re going to need a new metaphor....
It buys everybody time, albeit expensive time (over 10 billion euros) until September. Kicking the can down the road https://t.co/16jYZ4CrCu
11.05am BST
11:05
Varoufakis: Greek deal is more 'extend and pretend'
Yanis Varoufakis, Greece’s former finance minister, has given the deal the thumbs-down:
New supercharged, mututally-reinforcing austerity/recession & no debt relief – another extend-and-pretend Eurogroup https://t.co/6Qgy8CFOLD
A year ago, Varoufakis was doing battle with the eurogroup on a weekly basis (at least, that’s how it felt), trying to persuade fellow ministers to abandon their push for austerity packages laden with tax rises.
That approach died after the Greek people voted to reject creditors demands’, only for prime minister Tsipras to sign up to the third bailout.
10.53am BST
10:53
If you missed the Greek agreement, it’s online here:
The #Eurogroup statement on #Greece https://t.co/D8lU2f5zjz
10.46am BST
10:46
The Financial Times has a good word to describe the Greek deal - “messy”.
And that’s because the really sticky issue, of how to make Athens’ debts sustainable, has been kicked down the road. Although the creditors have made commitments, the agreement released in the early hours of this morning is light on detail.
Mehreen Khan and Alex Barker sum it up:
The ambiguities are legion. A target was set to maintain Greece’s gross financing needs at no more than 15 per cent of national income until 2030. And measures were outlined to do that, including maturity extensions and a possible buyout of IMF loans in 2018. The caveat: no numbers were agreed on what relief the measures would actually deliver.
And while the IMF dropped its most ambitious debt relief demands — including the need for them to be automatic when Greece exits its programme in 2018 — there was a big caveat. To participate financially in the programme before the end of the year, the IMF would need to approve a new debt sustainability analysis (DSA) on Greece that would meet its normal lending standards.
For Germany too, the deal amounted to a trade-off. Wolfgang Schäuble, German finance minister, met his two main red lines: no haircuts and no Bundestag votes before the German federal elections in 2018.
But to secure the IMF’s political participation, he made a concession: an implicit commitment to meeting a DSA that will be hard to retreat from. And language was softened on the requirement for Greece to meet a 3.5 per cent budget surplus target for at least the next 10 years; this would now be reviewed in 2018.
More here: Messy Greek debt deal leaves key questions unanswered
10.17am BST
10:17
In another reassuring signal from the markets, the yield on 2-year Greek bonds has tumbled below the 10-year bond yield.
Why does that matter? Because it means investors are now rating Greece’s short-term debt as less risky than its longer-term borrowings.
That’s how markets usually operate -- but for months Greece’s two-year yields (which rise when prices fall) have soared over the 10-year yield. Why? Because if Greece can’t repay its debts, it will default on shorter-dated bonds first.
This chart, from Reuters’ John Geddie, explains all:
Greek bond curve normalises -- 2yr below 10yr yields for first time since March -- in sign of default fears easing pic.twitter.com/GTKpchZX1g
10.12am BST
10:12
Although the London market is at a three-week high, City investors do recognise that the details of Greece’s debt relief are still up in the air.
Joshua Mahony of IG explains:
Eurozone discussions finally reached a conclusion regarding the restructuring of Greek debt, yet the outcome was far from constructive as ministers decided to kick the can by simply resume talks after the French and German elections.
This issue will drag on for years and there is a feeling that the Greeks will say whatever they need to in order to get a good deal. With austerity crippling the Greek economy, the hopes of it standing on its own two feet and paying back its debts anytime soon seem negligible.
Updated
at 10.32am BST
10.06am BST
10:06
Robin Bew of the Economist Intelligence Unit is also concerned about Greece’s debt mountain, which is currently 180% of GDP.
Unclear who blinked first on #Greece bailout. #Eurozone of #IMF. Greece gets its cash but no mutually acceptable solution to debt overhang
8.59am BST
08:59
IMF criticised over Greek climbdown
The International Monetary Fund is coming under fire from debt campaigners this morning.
They’re disappointed that the Fund has abandoned its commitment to “upfront” Greek debt relief as part of last night’s deal.
Instead, medium-term debt relief will only kick in around 2018 - and the details are still
Sarah-Jayne Clifton, Director of the Jubilee Debt Campaign, says this isn’t acceptable:
“IMF staff are proposing to lend more money to Greece without the upfront and unconditional debt relief they called for. This is a major climb down, which once again breaks the IMF’s own rules not to lend when they know a debt cannot be paid.
Last night, the IMF’s Poul Thomsen agreed that the Fund had made a ‘major concession’, in order to reach a deal.
In return, all creditors agreed that Greece’s debts are unsustainable, paving the way to debt relief over time.
Clifton though, insists that action is needed now.
“Eurozone finance ministers cannot keep repeating this pattern of sticking plaster measures followed by near defaults and all night crisis meetings for the next 40 years. Only significant cancellation of Greece’s debt now, including payments coming due now such as to the IMF and ECB, will help tackle the humanitarian crisis in the country and restore the lack of confidence which is holding back Greece and the wider European economy.”
Updated
at 9.05am BST
8.58am BST
08:58
Economist Megan Greene, of asset management firm Manulife, says Berlin appears to have won last night’s Tussle in Brussels:
Summary of Eurogroup: Germany always wins, IMF caves under pressure from Germany and US, no one does what's in Greece's best interests
8.47am BST
08:47
Greece’s stock market has jumped by 1.4% in early trading, led by bank stocks.