There has been no progress on the Greek front compared to a few weeks ago: the country is once again on the verge of bankruptcy.
Greece is a country in continuous emergency, it is certainly not new. For the International Monetary Fund (IMF), the fiscal consolidation plan signed with Europe is not credible and risks compromising the sustainability of the public debt.
The position of the IMF is quite clear; for Greece to be able to repay the loan granted by the Troika, the country needs:
– debt relief in some form;
– a contingent “cut” plan (from about 2 billion euros, 2% of GDP) in the event that the budgetary constraints envisaged are not met (a primary surplus of 3,5% of GDP in 2018).
The Government responded that a contingency plan is not compatible with the Greek constitution, which apparently forbids conditional commitments, and furthermore is politically unpresentable in parliament. As regards the cut on public debt, the greatest resistance comes from Germany. The Eurogroup scheduled for tomorrow, which was supposed to ratify the agreement between the parties and release a new tranche of aid envisaged in the 86 billion euro bailout plan, was canceled and postponed to a later date. But Greece needs to sign an agreement with its creditors quickly, because according to press rumors, there is little money left and the deadlines for the coming months are getting heavier.
We have never deluded ourselves, we have always maintained that the Greek risk has simply been set aside, and so it is. In Europe there are several risks to keep under control (Brexit, Grexit, Portugal and Spain); they are one of the main reasons that prompted us to eliminate the exposure to the European stock exchanges (and, for even longer, to the government bonds of the Peripheral Countries) in our tactical portfolios.
