At long last Euro zone, IMF agree on Greece debt deal.
Euro-zone finance ministers, the European Central Bank and the International Monetary Fund reached a deal early Tuesday in Brussels that is expected to see them release more financial aid to Greece.Deal? What Deal?
The euro-zone finance ministers, known collectively as the Eurogroup, said in a statement that a worse macroeconomic situation and delays in implementing assistance have resulted in a weaker outlook for Greek government finances.
The Eurogroup members said that the “necessary elements are now in place” for member states to approve a European Financial Stability Facility (EFSF) disbursement to Greece of 43.7 billion euros ($56.8 billion), with the formal go-ahead expected by Dec. 13.
Greece’s debt targets were also tweaked, with government debt now targeted to fall to 124% of gross domestic product by 2020, and to substantially less than 110% of GDP by 2022.
Eurogroup members said in a statement they are prepared to consider various measures to support Greece, including:
- Lowering interest rates on the Greek Loan Facility by 100 basis points
- Cutting guarantee costs for Greece’s EFSF loans by 10 basis points
- Possibly deferring interest payments on EFSF loans by 10 years.
The Eurogroup said that the measures will not affect the creditworthiness of the EFSF, the euro bloc’s bailout fund.
How the hell can there be a deal when the news clearly states the Eurogroup is prepared to consider various measures?
What kind of deal is that?
Why Does it Even Matter?
Let's assume for the moment that all of what the EU has considered actually happens. You still have to be nuts to think this makes the situation stable.
Supposedly "government debt is now targeted to fall to 124% of gross domestic product by 2020". This will be just another missed target in a long series of missed targets, not that 124% is remotely sustainable in the first place.
The market seems to have had enough of these games. The euro barely moved on the non-news.
Mike "Mish" Shedlock