The European Union’s top economic official says he has reached a deal with the International Monetary Fund to avoid a Greek default, but warned political leaders in Athens they must agree to a new round of controversial austerity measures or the agreement would be meaningless, reports FT.
Olli Rehn, the EU’s economic commissioner, said the IMF deal would allow international lenders to disburse €12bn ($17bn) to Greece even without an agreement on a new €120bn bail-out for Athens.
The IMF for weeks had been insisting that it could not pay its €3.3bn portion of the disbursement without the new full bail-out plan , but in recent days IMF officials have backed down from the demand.
The EU-IMF agreement appears to kick the can down the road only for a couple of months. German officials, the hardliners in making additional loans, are now suggesting putting off a decision on the full bail-out – including how to involve private bondholders – until September, when another €8bn payment to Greece is due.
Still even the current agreementt requires the Greek government to deliver, against the will of its people, on new austerity measures. There will be enormous pressures on Greek government leaders to deliver for the banksters, at the same time the Greek people riot in the streets.
Prime Minister George Papandreou will announce later today a new cabinet in an attempt to shore up fast-eroding support for any austerity program, as more members of his Socialist Party come out in opposition.
On Thursday, two Socialist party members withdrew their support for the government's radical austerity plan. That brings to four the number who have defected this week alone.
only in this insane world is this bullish...more like BS
This agreement is definitely a band aid for Greece to meet their short term obligations this summer. Zerohedge did a great job explaining how the structure of Greek debt owned by private bondholders really CANNOT be changed without a default and a complete unwind of CDS. The EU ministers must be quaking in their boots.
Not to be an apologist for Greece's financial behavior (this is a mess of their own making), but they are fools if they agree to more austerity and sell off national assets to European and American banker-thieves hoping to buy it all up for a pittance. After all that (new) pain and suffering, Greece will still default in the end. The people of Greece may just kill this deal yet.
It would be interesting to see if Greece called the EU's bluff and agreed to nothing. They might just get the money anyway to avoid the soon to follow implosion of banks and the end of the EU.
elijah, the bluff could be played out since Greece really has nothing to lose, but if the politicians are already playing for the other team (ie. creditors), well, this conflict of interest isn't helpful for the Greek people.
Is this Debt deal no number 501 or 502.More come backs than Mike Tyson.