While British Prime Minister Theresa May continues her road show to strengthen trade relations with the most strategically important countries in the context of international relations - from the USA to Turkey - the increasingly critical relationship between the European Union and the United States adds a new chapter to the saga on Greek and Italian debt.
First of all, the International Monetary Fund has published a report in which the Greek debt is analyzed and highlighted the risk of implosion due to an expansion of the same which could reach 2060% in 275, bringing the gross financing needs to 62% of GDP . The IMF currently estimates the debt at 180% and criticizes the lack of accuracy in the sustainability assessments of the Brussels working groups which, moreover, have not yet released the further tranche of financing linked to the bailout program of a total of 92 billion.
Furthermore, on February 6, the Fund will end the debate on debt management and repayment capacity, also to respond to pressure from the governments of Germany and the Netherlands, which are pushing for a contribution from the IMF. Also in the document, there is open talk of high unsustainability and how even the implementation of the policies agreed according to the ESM program does not allow Greece to avoid serious long-term problems.
Thus the IMF continues to push the community bodies to evaluate a substantial restructuring of the loan to Greece by reevaluating a possible lengthening of the grace period and maturities as well as a deferment in the payment of interest. The only point in common between the EU and the IMF lies in the attempt to introduce clauses for maintaining the budget surplus before the payment of interest at 3,5%.
And if the concerns in the Greek case are tangible, puns are wasted on the hypothesis of Italy's exit from the EU, from Italexit to ExitItaly. Some investment houses based in London have begun to disseminate reports on this hypothesis and even Mediobanca seems to have entertained its customers about phantom savings on European contributions.
Taking into account that in 2017 Italy will have to refinance approximately 260 billion of public debt, certainly the recent turbulence on the spread fueled by the risk of early elections are not helping the arduous task of the Treasury. The IMF always sees growth for Italy below 1% for both 2017 and 2018. And while waiting for the savings-saving decree to be definitively cleared through customs, all attention returns to political risk.
The analysis then made by the ECB on the costs and charges deriving from the commitments on Target2 in the event of Italy's exit from the euro is part of a mere study exercise which, however, has given many opportunities to raise a fuss about the electoral campaign.
Exit from the euro is not feasible for a country in Italy's economic conditions and evidently not only due to a debt problem, which is already very evident, but also due to the structural delays accumulated over the years of political alternations of governments have never given scope to a planning of long-term reforms applicable to the entire country, which remains engulfed by excess bureaucracy and under the weight of a state apparatus far from a change of pace. And after the assignment of the EBA (the European Banking Authority) to our country has also definitively vanished, it becomes crucial to put a firm stop to the Banking issue in the short term in order to attempt a convinced restart of the GDP.
Against the backdrop of new and growing alliances such as the one between the UK and the USA and between the USA and Russia, the European Union risks not being able to keep up with the American GDP, above all due to the renewed weakness of Greece and Italy to which Trump's policies neither will his influence on the IMF, which will make itself felt even stronger.
Thus the boost on European stock markets hoped for by many, and already held back by the French and German elections, could be definitively thwarted by greater attention paid to the American market and emerging countries. The latter would thus be able to mitigate the volatility deriving from the impact of the rises in US interest rates.
