Tagged IMF

Over the past weeks the global patchwork of economic interactions has unravelled, with economic activity grinding to a near halt as consumer spending collapsed, businesses closed, financial markets imploded, and supply chains fractured. According to the International Monetary Fund’s (IMF) Managing Director, the world has entered into ‘a recession at least as bad as during…

On Sunday, October 4th, Portugal had national elections. Seventeen parties entered the fight. Following the social crisis outcry, expectations and predictions reflected the general sentiment that the Socialists would be the next winners. How can we explain, then, that the voters rewarded the parties (PSD and CDS) that had made their lives so miserable with austerity measures?

In a bid to boost morale and ease the financial squeeze on Greek citizens, banks reopened on Monday, 20 July, after being closed for 3 weeks. Though banks are fully operational, withdrawals will still be capped at €60 per day, but now with the possibility to withdraw a whole week’s worth in one go. Restrictions on overseas payments remain in place. Also, trading on the Athens Stock Exchange is still frozen, along with clearing services and cash settlements for Greek securities.

The heads of state and government of the Eurozone met on 22 June in Brussels to attempt to find an agreement on the continuation of Greece’s bailout. A sense of urgency accompanied the summit, resulting from the imminence of a potential Greek default and a run on deposits in Greek banks. At the conclusion of the Summit, President of the European Commission Juncker stated that he was “convinced that we will come to a final agreement this week, because we have to.” In anticipation of the Summit, Greece submitted a final proposal containing new measures for addressing its economic and financial situation, which were discussed by the finance ministers of the Eurogroup prior to the Summit

By Clément Fontan

One month ago, the Bruegel institute, a respected and influential EU think-thank, published an opinion piece by former IMF staff member Ashoka Mody. In his excellent analysis, Mody relies on leaked insider information and IMF self-criticism to condemn the Fund’s role in the Greek bailout process from 2010 to the present. In short, he reminds us that the lack of debt restructuring during the 2010 bailout was primarily aimed at protecting the holders of Greek bonds, e.g. the major French and German banks, despite its unsustainability. Then, he underlines that the structural reforms and the budget cuts worsened the economic and social conditions in Greece to such an extent that a second bailout was needed in 2012.

At the Eurogroup meeting on Friday, 24 April, all eyes were on Greece. The embattled Eurozone country got hammered for backtracking on much needed fiscal reforms. Eurogroup officials stated that such measures are vital in helping the Greek government secure its debt repayments. Without the remaining €7.2 billion in the bailout package, Greece will run out of money in a matter of weeks.  The stark warning came as Mr. Varoufakis, Greece’s Finance Minister, tried to calm fears over his country’s ability to raise

In the European Parliament the head of the Single Supervisory Mechanism (SSM) for the Eurozone banks has committed herself to restraining financial institutions and closely monitoring the models they use to calculate risks. Danièle Nouy has given assurances that “we will be a demanding supervisor, however at all times we shall strive to make our action fair and impartial.” The SMM just published its first report that has overseen more than 6,000 banks in the region since last November.

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