Monday, June 20, 2011

Osborne is off the hook for the time being

This morning the Telegraph trumpeted that George Osborne our Chancellor of the Exchequer in the strange world we live in, was going to get tough:
George Osborne, the chancellor, will tell EU finance ministers in Luxembourg today that Britain does not intend playing a part in any new aid package for Greece.
As one reads the article, though, one finds that the decision is not actually Mr Osborne's.
Germany and France have signalled that there is no reason for London to pay a share of a repeat bailout, likely to be finalised within weeks and for a similar sum as the first.

At today's talks in Luxembourg, Mr Osborne is expected to say that the issue is one for the eurozone alone.

Britain's only potential contribution to bailing out Greece again now comes from its shareholding in the IMF, in the form of loan guarantees which would only be called in if Greece defaults.
Meanwhile, the IMF is urging the Eurozone (or possibly the EU) to go on pouring money into Greece, who seems curiously reluctant to do anything to help itself, relying possibly on yet more bail-outs. Furthermore, says the Acting Head of the IMF (there was a spot of trouble with the man who is supposed to be making these comments) further integration is needed.
The fund added: "Rapid implementation of the commitment to scale up the European financial stability facility and a further extension of its potential uses would sent a much needed signal that member countries 'will do whatever it takes to safeguard the stability of the euro area'. In this context, it will be essential to bring the unproductive debate about debt reprofiling or restructuring to closure quickly, and avoid and impression that the European stability mechanism will be conditional on debt restructuring."
Nevertheless, the Finance Ministers have decided to wait and see. In particular they would like to see some of those proposed austerity measures and selling of state assets, that the Greeks keep demonstrating against, actually being put into place.

Euro zone finance ministers have postponed a final decision on extending 12bn euros ($17bn) in emergency loans to Greece, until it introduces further austerity measures.
The ministers said on Monday that they expected to pay the next tranche of a 110bn-euro bailout package, backed by European Union and the International Monetary Fund, by mid-July.

Greece has said it needs the loans by then to avoid defaulting on its debt.

Keeping up their pressure on Athens, where public opposition to austerity has been growing, the ministers insisted that disbursement would depend on the Greek parliament first passing laws on fiscal reforms and selling off state assets.

"To move to the payment of the next tranche, we need to be sure that the Greek parliament will approve the confidence vote and support the programme, so the decision will be taken at the start of the month of July," Didier Reynders, Belgian finance minister, said after the meeting in Luxembourg.
Mr Osborne must be relieved.

No comments:

Post a Comment