Up to 30 June 2015. Greece had to pay
installment debt to the IMF. Of course she did not, and – as it turns out – for now, it does not meet any “unpleasantness” from the Fund. Much c ięższa
Athens awaits passage in connection with a debt owed to the ECB.
By refusing
discharge of an obligation to the Fund, the Greeks launched a written-many
steps procedure. Sanctions imposed by the IMF, not to mention the exclusion of
the country with the Fund are not because neither automatic nor immediate. Indeed, in the current situation Greece can not count on financial assistance from the IMF, but Athens had long been aware of this.
Here’s the next move described by the IMF procedure:
What awaits
Greece from the IMF?
- Immediately – IMF sends a reminder to the country which is in arrears with
payment. This communication is carried out by the office of the competent director
executive. Access member of the IMF funds will be suspended.
- 2 weeks -
the board sends the governor representing the country (in the case of Greece is
This Minister of Finance) communication in which it highlights the seriousness of the situation and urges
to fully and promptly settle the obligation.
- 1 month – Director
IMF Managing notify the board of the Fund of arrears and shows the level of
obligations and steps have been taken to protect
payment.
- 6 weeks -
managing director shall notify the country concerned that if the payment is not covered
will be regulated, the complaint will be addressed to the board.
- 2 months – Director
Managing directs the complaint to the board.
- 3 months -
management vigilant complaint. Typically, in such a situation the Board
decides to limit a country access to the resources of the IMF and the right to
the use of special drawing rights (SDRs).
- 6-12 months
- The Board shall review its decision. Depending on the efforts made
by country, the board may suspend cooperation with the country. In this case
all governors are informed IMF that the country still does not repay
its obligations to the Fund, which is read as a declaration of absence
agreement.
- Up to 15
months – can be suspended technical assistance to a country unless
that the board determines otherwise.
- Up to 18
months – can be suspended voting rights and representation of the country in the IMF.
- Up to 24
months – expulsion procedure is initiated with the IMF.
It is worth
noting that a default installment of the debt owed to the institution that is the IMF is not
treated synonymously with, eg. not have a TV bonds . Not without reason
Fund scrolls documents in this context the term “backlog”, and
no “bankruptcy”. This view there are three major rating agencies, according to
the lack of which the installment repayment debt to the institution does not constitute an event after
which you declare bankruptcy.
Of course, the lack of
the installment repayment of debt to the IMF puts Greece in the infamous
Among the countries that have problems with payment of liabilities to the Fund
(Zimbabwe, Somalia, Sudan). Further deterioration of the zszarganego in
recent years the image of the country in the eyes of investors seems now, however, the smallest
Athens concern. Sustainable return to the global debt market Greece and so at the moment can not plan ahead, and the first bonds from private investors must buy only for two years.
Since no repayment
installment debt to the IMF did not meant that Greece “sky fell on my head” on
They come to the fore other obligation. The new cut-off date, which
commonly said to be already in the financial markets is 20 July . Until that date, Greece
It has to repay the installment of the European Central Bank (3.46 billion euros). For this installment important
is not so much its size (Athens probably would not have and will not have so many holidays
funds), but the same creditor.
The IMF is
global institution, in which the main role is played by the United States and
which – as shown in the above table – nor demands money immediately,
nor can it impose severe penalties on Greece. Debt held by euro zone
that while the “family debt”, which – as you know – the best comes out
the photos.
If Greece
does not repay the installments to the ECB, the losses caused in this way will be covered
They had to be by other members of the ECB. But more importantly – the Greek banks,
which in recent weeks they flowed billions more euros, maintained
They are alive only thanks to the “drip” in the form of funding from ELA program,
at the start and each time increasing his consent limits have
express ECB.
Currently, the ECB has agreed to grant the Greek banks 89 billion from the ELA program. This amount is awarded in the form of revolving loans to banks. With this program can not be used unconditionally – the ECB’s internal regulations say that the support may be granted only to solvent banks that provide adequate protection (called. Collateral). Everything therefore depends on whether the ECB considers that the Greek banks are able to stay afloat and that presented by collateral (including, eg. Greek government bonds) meet the requirements of “quality”.
After June 30 should remember to whom, how much and when to pay Greece. WSJwallstreet Http://t.co/74vS4LpgrG pic.twitter.com/JLsdbShLz6
- Michael Żuławiński (M_Zulawinski) July 1, 2015
Although
the last weeks leading actors show Fri. “Grexit” not once Surprised
audience, failure to repay debt owed to the ECB and the continued use of the program
launched an aid agreement with the ECB seems to be something quite impossible . Lack
unlimited possibilities for creating new euro by the Bank of Greece would in
such a situation lead either to bankruptcy or the Greek banking sector
the total rebellion of Athens and abandon the common currency in favor of the drachma.
Of course,
still it can not be excluded that after Sunday’s referendum, however, agreements Greece
your creditors, obtain additional resources and to repay installment of the IMF before the fund
barely has time to come to the second step in their procedure. But for clock
countdown to Grexitu should be switched on 20 July and rearm
be patient.
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Michael Żuławiński
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