Speculations in May 2010 projecting that Greek debt obligations would exceed the aid provided by the IMF-EU bailout fund by 2011 are proving true. This week ends a tough week for
Greece as the country has rattled markets again with the possibility of bond defaults.
Greece’s greatest ally in its debt crisis has been the IMF, who led the structuring of the bailout agreement for Greece a year ago. Aid under threat from the IMF is a result of a potential debt restructuring which would ask bondholders to wait for their debt payments. Should Greece postpone those debt repayments, those bonds would become ineligible as collateral at the European Central Bank making its loan commitments insufficient for the IMF aid contribution on June 29.
Greece finds itself in a tough spot as it will be difficult for the country to raise additional capital from already distressed Eurozone countries who are weary to provide further investment. Next week’s review of Greece’s fiscal situation by the IMF, ECB, and participating Eurozone countries will determine the remaining aid program payments for the Eurozone country.
Wall Street Journal, May 27, 2011
Greece Aid Is Under Threat, Europe Finance Chief Says
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