Odd. It’s normally German Finance Minister Wolfgang Schaeuble who ‘announces’ plans for new Greek programs and additional loans. Apparently, this time, the Germans made an arrangement among themselves: That ESM chief, German Klaus Regling will bring the bad news. It’s logical, as Schaeuble tries to topple Chancellor Merkel and cannot risk to scare his supporters off, with a new loan to Greece.
Managing Director of European Stability Mechanism Klaus Regling said that he believes that the Greek government will soon be out of liquidity and Greece will need another midterm program with the participation of International Monetary Fund.
In an interview to French daily Le Figaro, Klaus Regling said that the first six months of 2015 were a catastrophe for the Greek issue, He added that he sees ‘signs of improvement in the relations between Greece and international lenders and warned that
“sooner or later the Greek government will need money.”
“Greece will not need money tomorrow,” Regling stressed “but sooner or later there will be a money problem. Greece has debt service payments of nearly 4 billion euro in the first quarter [of 2016]. It is very likely that the country has a small primary deficit in the beginning of the year. Therefore, the government will need money to cover budget spending. “
Speaking about the issue of the Greek Debt Relief, Regling pointed out that the Eurogroup was committed to Debt Relief after the Program Review is completed and added that “the Greek government expects some reward.”
However, he added that “economically, the renegotiation of debt is not urgent because Greece has received a grace period of 10 years to repay the debt and the majority of the interest. Therefore, during the next 10 years, the service of the debt will not be increased. Consequently, a new debt relief would have an impact on payments, mainly after 2022.”
Klaus Regling said that “for now the aim is to create incentives for investors to return but this mainly concerns a five-year or ten-year horizon, and we have to go step by step.”
Klaus Regling must have been in a mood of joking to claim that the current aim was ‘incentives for investors’, when the adjustment program has been turning the Taxation System upside-down once a year since 2010 thus creating a constant and stable system of financial and economic instability.
But Regling has a view: a 5- to 10-years horizon, so until all wages are some 300 euro per month and investors will rush to hire the new European poor.
Regling said also that he thinks the Program Review will start around Easter. For Catholics, Easter is on March 27th, for Greek Orthodox Easter falls on May 1st. Go figure.
Regling’s Interview in French here and in Greek here.
PS Regling’s interview is important because he lets us know where we are heading. To Nowhere. and the IMF will keep whining, “sorry, our method and calculators were wrong, but we keep applying them.”