News / Economy

Latin American Countries Refuse to Back New IMF Aid for Greece

The International Monetary Fund (IMF) logo is seen at the IMF headquarters building during the 2013 Spring Meeting of the International Monetary Fund and World Bank in Washington, April 18, 2013.
The International Monetary Fund (IMF) logo is seen at the IMF headquarters building during the 2013 Spring Meeting of the International Monetary Fund and World Bank in Washington, April 18, 2013.
Reuters
Brazil's executive director at the IMF refused to back the Fund's move this week to keep bankrolling Greece, citing risks of non-repayment, and the Fund itself said Athens might need faster debt relief from Europe.

The abstention by Latin American states from the IMF decision was revealed by their Brazilian representative in an unusual public statement on Wednesday, highlighting growing frustration in emerging nations with Fund policy to rescue debt-laden Europeans.
 
"Recent developments in Greece confirm some of our worst fears,'' said Paulo Nogueira Batista, Brazil's executive director at the IMF, who also represents 10 small nations in Central and South America, the Caribbean, Asia and Africa. Batista clarified on Wednesday that he was speaking only for himself.
 
“Implementation [of Greece's reform program] has been unsatisfactory in almost all areas; growth and debt sustainability assumptions continue to be over-optimistic,” said Batista, criticizing the IMF executive board's decision on Monday to release 1.7 billion euros of rescue loans to Greece.
 
This raised to 28.4 billion euros ($37.6 billion) the total amount of funds the IMF has so far committed to Greece - an amount that Athens might default on if it gets ditched by its euro zone partners, Batista warned.
 
He was pointing to a separate report published by the IMF on Wednesday, which said that if Greek reforms derail and European governments withdraw their support, then Athens' “capacity to repay the Fund would likely be insufficient.”
 
“This statement is one step short of openly contemplating the possibility of a default or payment delays by Greece on its liabilities to the IMF,” Batista said, referring to the Fund's cornerstone policy of barring countries from defaulting on it.
 
The Europeans and the United States, which have a majority of voting rights at the IMF's executive board, have so far solidly backed Greece. U.S. Treasury Secretary Jack Lew flew to Athens earlier this month to reiterate Washington's support.
 
Despite having used up almost 90 percent of its 240 billion euro bailout since mid-2010, Athens is still shut out of bond markets and remains in its creditors' emergency ward.
 
The country's debt sustainability still depends on a pledge by eurozone partners to provide it with further debt relief - on condition that it sticks to painful budget cuts and reforms imposed by lenders that helped cause a crippling recession.
 
Led by Germany, the eurozone has pledged to consider mild debt cut relief measures for Greece next year, such as extending maturities on its rescue loans, to reduce its debt-to-GDP-ratio to 120 percent by 2020 from a currently projected 124 percent.
 
The eurozone also committed itself to reduce Greece's debt-to-GDP-ratio further, to “substantially below” 110 percent by 2022.
 
But Athens may need a faster, bigger debt cut, the IMF warned, to spur investor confidence and achieve the annual growth rates of about three percent which underpin its bailout plan.
 
“Should debt sustainability concerns prove to be weighing on investor sentiments even with the framework for debt relief now in place, European partners should consider providing relief that would entail a faster reduction in debt than currently programmed,” the report said.
 
Despite impressively reducing its budget deficit since 2010, Athens must still improve tax collection and cut government waste to hit fiscal targets, according to the IMF.
 
If not, it will need fresh austerity measures of the kind that would test the cohesion of its fragile coalition government.
 
“Unless the authorities tackle the problems of revenue administration with much greater urgency in the coming months, a credible 2014 budget would again need to be centered on painful expenditure cuts,” the IMF's mission chief for Greece, Poul Thomsen, said in a conference call with reporters.
 
According to latest EU forecasts to be updated in its next EU/IMF review, Athens needs to find extra savings of about four billion euros to meet its 2016 fiscal targets.
 
But Greek Finance Minister Yannis Stournaras told Reuters on Tuesday that the updated forecast might not show any gap at all.
 
The IMF, however, remained skeptical. There was “no evidence” that Greece's targeted revenue gains from improved tax collection through to 2016 will materialize, its report said. “Achieving the significant fiscal adjustment still ahead in a socially acceptable manner is unlikely to be possible without much deeper public sector reforms.”

You May Like

Disappointing Report on China's Economy Shakes Markets

In London and New York shares lost 3 percent, while Paris and Germany dropped around 2.4 percent More

DRC Tries Mega-Farms to Feed Population

Park at Boukanga Lonzo currently has 5,000 hectares under cultivation, crops stretching as far as eye can see, and is start of ambitious large-scale agriculture plan More

Video War, Drought Threaten Iraq's Marshlands

Areas are spawning ground for Gulf fisheries, a resting place for migrating wildfowl, source of livelihood for fishermen and herders who have called the marshes home for generations More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Nobel Prize Winner Malala Talks to VOAi
X
August 31, 2015 2:17 AM
Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video Nobel Prize Winner Malala Talks to VOA

Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video War, Drought Threaten Iraq's Marshlands

Iraq's southern wetlands are in crisis. These areas are the spawning ground for Gulf fisheries, a resting place for migrating wildfowl, and source of livelihood for fishermen and herders. Faith Lapidus has more.
Video

Video Colombians Flee Venezuela as Border Crisis Escalates

Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Rebuilding New Orleans' Music Scene

Ten years after Hurricane Katrina inundated New Orleans, threatening to wash away its vibrant musical heritage along with its neighborhoods, the beat goes on. As Bronwyn Benito and Faith Lapidus report, a Musicians' Village is preserving the city's unique sound.
Video

Video In Russia, Auto Industry in Tailspin

Industry insiders say country relies too heavily on imports as inflation cuts too many consumers out of the market. Daniel Schearf has more from Moscow.
Video

Video Scientist Calls Use of Fetal Tissue in Medical Research Essential

An anti-abortion group responsible for secret recordings of workers at a women's health care organization claims the workers shown are offering baby parts for sale, a charge the organization strongly denies. While the selling of fetal tissue is against the law in the United States, abortion and the use of donated fetal tissue for medical research are both legal. VOA’s Julie Taboh reports.
Video

Video Next to Iran, Climate at Forefront of Obama Agenda

President Barack Obama this week announced new initiatives aimed at making it easier for Americans to access renewable energy sources such as solar and wind. Obama is not slowing down when it comes to pushing through climate change measures, an issue he says is the greatest threat to the country’s national security. VOA correspondent Aru Pande has more from the White House.
Video

Video Arctic Draws International Competition for Oil

A new geopolitical “Great Game” is underway in earth’s northernmost region, the Arctic, where Russia has claimed a large area for resource development and President Barack Obama recently approved Shell Oil Company’s test-drilling project in an area under U.S. control. Greg Flakus reports.
Video

Video Philippine Maritime Police: Chinese Fishermen a Threat to Country’s Security

China and the Philippines both claim maritime rights in the South China Sea.  That includes the right to fish in those waters. Jason Strother reports on how the Philippines is catching Chinese nationals it says are illegal poachers. He has the story from Palawan province.
Video

Video China's Spratly Island Building Said to Light Up the Night 'Like A City'

Southeast Asian countries claim China has illegally seized territory in the Spratly islands. It is especially a concern for a Philippine mayor who says Beijing is occupying parts of his municipality. Jason Strother reports from the capital of Palawan province, Puerto Princesa.
Video

Video Ages-old Ice Reveals Secrets of Climate Change

Ice caps don't just exist at the world's poles. There are also tropical ice caps, and the largest sits atop the Peruvian Andes - but it is melting, quickly, and may be gone within the next 20 years. George Putic reports scientists are now rushing to take samples to get at the valuable information about climate change locked in the ice.

VOA Blogs

World Currencies

EUR
USD
0.8916
JPY
USD
121.32
GBP
USD
0.6487
CAD
USD
1.3252
INR
USD
66.401

Rates may not be current.