Just hours after receiving a clear mandate from the Greek people to stand firm in the face of calls for more austerity, the Greek government, squeezed by an acute liquidity shortage in the collapsing banking sector, is set to head back to the negotiating table seeking to “restore liquidity” and find a “sustainable” solution to the country’s debt problem. From Bloomberg:
- LEADERS OF GREEK RULING AND OPPOSITION PARTIES ISSUE JOINT STATEMENT BACKING EFFORTS TO REACH DEAL WITH CREDITORS
- GREEK POLITICAL PARTIES SEEK AGREEMENT TO COVER FINANCING NEEDS
- GREEK LEADERS SAYS GOAL IS TO SECURE COUNTRY’S FINANCING
- GREEK LEADERS: DEAL SHOULD TACKLE DEBT SUSTAINABILITY PROBLEM
- GREEK LEADERS: RESTORING LIQUIDITY IS TOP PRIORITY
Speaking of finding a “sustainable” solution (i.e. one that includes writedowns), the IMF, whose well-timed report on the necessity of Greek debt haircuts might well have played a vital role in cementing a victory for the “no” vote on Sunday, is now “ready to help” the Greeks. Here’s Christine Lagarde:
“The IMF has taken note of yesterday’s referendum held in Greece. We are monitoring the situation closely and stand ready to assist Greece if requested to do so.”
The question of course, is this: what type of “assistance” is the IMF planning to provide?
The Fund’s recommendation is for EU creditors to haircut their portion of Greek debt, something Germany is profoundly unwilling to consider. Case in point (from Reuters):
The German government signalled a tough line towards Greece on Monday, saying it saw no basis for new bailout negotiations and insisting it was up to Athens to move swiftly if it wanted to preserve its place in the euro zone.
“Greece is a member of the euro. It is up to Greece and its government to act so that this can remain the case,” Steffen Seibert told a government news conference. “It depends now on what proposals the Greek government puts on the table.”
Pressed on what concessions Berlin might be willing to make to Greek Prime Minister Alexis Tsipras, a finance ministry spokesman dismissed the idea of a debt restructuring sought by Athens and favoured by the International Monetary Fund (IMF)
