27.5.2011
By Simon Miller
The International Monetary Fund (IMF) could block the next payment in Greece’s bail-out according to the chairman of the eurozone finance ministers.
Jean-Claude Juncker, who is also the prime minister of Luxembourg, warned that the IMF could only release funding when there has been a financing guarantee for the 12-month period.
As such Juncker was unsure that the European Union, European Central Bank and the IMF would come to the conclusion that this condition has been met.
"I don't think that the troika will come to the conclusion that this is given. If the Europeans have to realize that the disbursement of the IMF before June 29 can't operatively happen, the expectation of the IMF is then that the Europeans will take the place of the IMF," he said.
Juncker told reporters that extending the maturity of Greek sovereign bonds could only take place once Greece’s budget deficit has been brought under control otherwise there was a threat of contagion.
"I'm against simple restructuring, as the risks are unknowable, and I have a hunch, there's the contagion possibility," he commented. "Only once the budget deficit is contained can we start the soft re-profiling of [Greece’s] debt."
Markets reacted badly to the press conference with investors flooding to th relative safe-haven of German bonds and the Euro fell to its lowest level against Sterling for two-and-a-half years and sits at 0.86 as of 0900 this morning.
At a press conference in New York yesterday, IMF director for external affairs Caroline Atkinson was pressed as to whether the IMF had told Greece and the EU that it was not prepared to put money on the table for the next tranche.
She commented: “We act as a catalyst for other financing. That has been the case in Greece, with the European partners, with Greece’s European partners, who put in a lot of financing.”
“Our Executive Board does not ever let us lend when we don’t have an assurance—nothing’s ever sure, but when we haven’t assured ourselves that there will be no gap, because it’s important that we at the IMF put our money in when we have worked with a country to take steps to close the gap and when we are seeing that other financing is available,” Atkinson added.
The IMF is heading to Portugal for a “a technical assistance mission” which will look at the public finances and giving some technical assistance on public financial management, according to Atkinson. The mission is “separate from the review mission or a negotiating mission which will take place later on”.
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