Back
25 Feb 2015
With IMF and ECB’s interests not represented, April review key for Greece – BBH
FXStreet (Barcelona) - The Brown Brothers Harriman Team comment on the IMF and ECB’s stance on the Greek deal, and further the realistic focus for Greece should be on the end of April review.
Key Quotes
“The IMF's participation in the European debt crisis was controversial at the start. Reluctantly, European countries, including Germany relented. The IMF accounts for about a sixth of the aid programs. Greece owes the IMF about 1.5 bln euros next month. How will it come up with the funds? It seems likely to us that Greece will be allowed to issue for T-bills, but this has to be decided by the ECB.”
“Draghi, whose conduct of monetary policy has been criticized especially by the Bundesbank, is also less than satisfied with the Greek proposals. After suspending the waiver on accepting Greek bonds as collateral, Draghi seems to be in no particular hurry to reverse itself now.”
“That said, it is hard to imagine the ECB cutting Greece's access to the Emergency Lending Assistance (ELA) facility for which the national central bank bears the risk. The ECB is expected to review Greece's ELA next week."
“It appears that what happened was that EC and Eurogroup officials helped Greece draft what would be an acceptable document for them.”
“The ECB and IMF were not presented in the shuttle diplomacy. This means that their interests were not represented. It is ultimately a political decision.”
“That said, the IMF and ECB have the purse strings, but will not overrule the political decision.”
“Although nearly all the reports have underscored that Greece's aid program was given a four-month extension, we think it is more realistic to focus on the end of April review.”
“It is in the next two months that the Greek government needs to pass the enabling legislation to enact the reforms. This is indeed a tall order.”
“However, the Syriza-led government is going in a direction on corruption, tax evasion, and rent-seeking behavior that were not essentially for the Troika in the past.”
Key Quotes
“The IMF's participation in the European debt crisis was controversial at the start. Reluctantly, European countries, including Germany relented. The IMF accounts for about a sixth of the aid programs. Greece owes the IMF about 1.5 bln euros next month. How will it come up with the funds? It seems likely to us that Greece will be allowed to issue for T-bills, but this has to be decided by the ECB.”
“Draghi, whose conduct of monetary policy has been criticized especially by the Bundesbank, is also less than satisfied with the Greek proposals. After suspending the waiver on accepting Greek bonds as collateral, Draghi seems to be in no particular hurry to reverse itself now.”
“That said, it is hard to imagine the ECB cutting Greece's access to the Emergency Lending Assistance (ELA) facility for which the national central bank bears the risk. The ECB is expected to review Greece's ELA next week."
“It appears that what happened was that EC and Eurogroup officials helped Greece draft what would be an acceptable document for them.”
“The ECB and IMF were not presented in the shuttle diplomacy. This means that their interests were not represented. It is ultimately a political decision.”
“That said, the IMF and ECB have the purse strings, but will not overrule the political decision.”
“Although nearly all the reports have underscored that Greece's aid program was given a four-month extension, we think it is more realistic to focus on the end of April review.”
“It is in the next two months that the Greek government needs to pass the enabling legislation to enact the reforms. This is indeed a tall order.”
“However, the Syriza-led government is going in a direction on corruption, tax evasion, and rent-seeking behavior that were not essentially for the Troika in the past.”