European finance ministers aim to stitch together Greece’s next aid payment this week as a sputtering euro-area economy and a spat with the International Monetary Fund cloud efforts to resolve the debt crisis.
The finance chiefs are due to meet in Brussels tomorrow for the second time in a week after they agreed seven days ago to keep Greece’s bailout aid flowing. In addition to a disagreement between the European Union and IMF over softening Greece’s debt target, the ministers will attempt to re-engineer the current bailout without asking taxpayers to put up more money.
The talks are “likely to be tense as all players set out their positions,” Thomas Costerg, an economist at Standard Chartered in London, said in an e-mail. “Greece’s debt can is likely to be kicked further down the road, but we could see some constructive statements.”
The meeting of the ministers from the 17-member euro area underscores continuing skirmishes among EU officials confronting rising unemployment and a slowing economy as they struggle with the three-year-old debt crisis. The finance chiefs’ talks will precede a Nov. 22-23 EU summit to resolve the bloc’s budget, a project threatened by a dispute with the U.K.
With tens of thousands of Europeans staging protests last week against austerity measures and unemployment, shifting dynamics in other European countries could foreshadow renewed conflict -- an early election in Italy, a regional vote in Spain and an approaching bailout package for Cyprus.
Spanish bonds fell last week, pushing 10-year yields to the highest level in six weeks, as a report showed the euro-area’s economy was pushed into recession in the third quarter. The euro has fallen 1.7 percent this month against the U.S. dollar, slipping 0.3 percent to $1.2743 on Nov. 16.
IMF Director Christine Lagarde took issue with European governments’ decision to push back Greece’s debt-reduction target by two years to 2022 against the fund’s recommendations, raising questions over whether the IMF would keep financing Greece.
Lagarde, who cut short a visit to Southeast Asia to return to Europe, signaled a potential clash in an interview in Manila on Nov. 17 by saying she’ll defend the IMF’s credibility.
Lagarde said that she was approaching the talks feeling “patient and resilient.” Even so, “we never leave the table,” she said when asked about dropping support.
Via - Bloomberg
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