–German Econ Min: Greece Unlikely To Meet Its Debt Targets
–German Econ Min: Greek EMU Exit Has Long Since Lost Its Horror

BERLIN (MNI) – The International Monetary Fund has signaled that it
will not contribute to further financial aid for Greece, raising a
greater risk of insolvency in September, the German weekly Der Spiegel
reported Sunday.

According to the magazine, high-ranking IMF officials have already
informed the EU leadership of its intentions.

It is already clear that Greece won’t be able to meet the target of
cutting its debt to 120% of GDP by 2020, Der Spiegel wrote. Granting
Greece more time to meet its budget consolidation goals would require
E10-50 billion in additional aid, according to estimates by the troika –
the EU Commission, the ECB and the IMF, the magazine reported.

The risk of Greece leaving the Eurozone is now seen as manageable,
Der Spiegel said. In order to avoid a contagion effect, Eurozone
governments want to wait until Europe’s permanent rescue fund ESM is in
operation. A first ruling by the German Constitutional Court on the ESM
is scheduled for September 12.

In the meantime, the ECB might bridge the gap, Der Spiegel wrote.
On August 20, Greece needs to pay back some E3.8 billion to the central
bank. Athens might sell that amount of T-bills to Greek banks, which
could then use the bonds as collateral with the ECB.

Meanwhile, German Economics Minister Philipp Roesler told German
ARD public television in an interview aired Sunday that Greece will most
likely not be able to meet the goals agreed with its international
lenders. “I want to say this here very clearly: if Greece does not meet
its obligations, there can be no further payments to Greece,” he
stressed.

In that case, Greece might come to the conclusion that it would be
better to leave the Eurozone, said Roesler, who is also vice chancellor
and head of the free market-orientated FDP, the junior partner in the
government coalition. “I think that for many experts, for the FDP, and
for me, a Greek exit from the Eurozone has long since lost its horror,”
he added.

–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com

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