GTC Advisors – Greek Bailout Update, IMF and Germany Disagree on Next Move

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GENEVA, Switzerland - May 23, 2017 - PRLog -- From the BBC:

Greece has failed to secure a deal to unlock the next instalment of its multi-billion-dollar bailout after talks with eurozone finance ministers broke down.

Eurogroup head Jeroen Dijsselbloem said there was still a gap "between what could be done and what some of us had expected should be done".

Nonetheless, he said they were "very close" to an agreement.

Informal talks are expected to continue ahead of the group's 15 June meeting.

The Brussels-based meeting was aimed at deciding whether Greece had done enough to receive a €7.5bn (£6.4bn; $8.3bn) loan plus debt relief.

The cash is vital for Greece to avoid defaulting on a debt repayment due in July.

To secure the funds, the country has had to enact a series of economic reforms.

The International Monetary Fund and Germany are reported to have disagreed over how to help ease the country's debts once its rescue programme ends next year.

The IMF's participation in Greece's latest bailout hinges on resolving this issue.

"The feeling was.... more work was needed to be able to have that kind of clarity that the financial markets understood and the Greek people understood (of) what to expect at the end of the programme period in terms of debt relief," Greek Finance Minister Euclid Tsakalotos said.

However, he also said he was optimistic that a definitive deal could be brokered by the time of the next formal meeting in June.

Figures released earlier this month showed that Greece had fallen back into recession ( for the first time since 2012.

The country's gross domestic product (GDP) fell by 0.1% in the first three months of the year after shrinking by 1.2% in the final quarter of 2016, the Eurostat figures showed.

This latest news is a blow to the perceived recovery in the Eurozone. Whilst all eyes are on Greece at the moment, there are still other economies feeling the pressure and with the ECB looking to be split over how much longer they will continue to apply QE, many analysts believe that the EU is still on the precipice of a return to recession for the entire region.

Whilst the French and Dutch elections showed there was still belief in the single market that is the Eurozone, the fact that Greece is struggling to implement the necessary austerity measures to cement further bailout funds is a sign that the bloc is faltering. With the main protagonists out of Germany looking to pull back financial stimulus across Europe it is important that the Greek government makes sure that before their June meeting with the troika, plans are in place to show that they mean to make the cuts where necessary.

So far this year we have been championing the US markets as the safe place to make growth based investment decisions. They have not proved us wrong, despite a slight pull back late last week due to a plethora of concern about Trumps administration, the US markets are still ahead of the curve and showing solid gains YTD.

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John Healy

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