US treasury secretary Timothy Geithner
Timothy Geithner, the US treasury secretary, has occasionally irked his European counterparts with attempts to influence the eurozone’s crisis policymaking, but European officials will be closely listening to him as the clock ticks down to next month’s spring meetings of the International Monetary Fund.
European Union leaders hope to get non-eurozone backing to double the IMF’s funding to $1tn at the gathering. Although the US won’t contribute, Washington is the IMF’s largest shareholder and is widely believed to be behind the insistence of Christine Lagarde, the IMF chief, that no increase will be forthcoming unless the eurozone increases the size of its own €500bn rescue system.
Those interested in tea leaf reading will get their chance today, when Geithner testifies on Capital Hill on the eurozone crisis. The House financial services committee, where Geithner will appear, helpfully released his testimony last night, and it makes clear Geithner is in no mood to back down. Read more
Poul Thomsen, head of the IMF mission to Greece
On Friday, after much of Europe shut down for the week, the International Monetary Fund issued its 231-page report on Greece’s new €174bn bailout, which seems to struggle to keep an optimistic tone about Athens’s ability to turn itself around over the course of the rescue plan.
But the IMF report is worth scrutinising for reasons beyond its gloomy prose: If there’s anyone who might force eurozone leaders back to the drawing board once again, it’s the IMF, which essentially pulled the plug on the first €110bn Greek bailout early last year when it became clear it wasn’t working.
Signs that the IMF is on a bit of a hair trigger litter the new report. Read more
Hungary's Viktor Orban, left, with José Manuel Barroso during an EU summit earlier this year.
Perhaps because it is not in the eurozone, the recent turbulence in Hungary has not gotten a huge amount of attention internationally. But Budapest and Brussels are currently on a collision course that could have significant consequences for the region’s economic stability.
At issue is whether the European Union and the International Monetary Fund will provide financial assistance to Hungary at a time the florint is in free-fall and the government’s borrowing costs are skyrocketing, with 10-year bond yields now above 9 per cent, well above levels where Ireland, Greece and Portugal were forced into bail-outs. Standard & Poor’s downgraded Hungarian bonds Wednesday evening, citing the unpredictability of prime minister Viktor Orban’s economic policies – including his attempt to assert more control over Hungary’s central bank.
In a letter to Orban sent this week by José Manuel Barroso, the European Commission president, and obtained by the FT, Barroso drives a hard bargain. Not only does he “strongly advise” Orban to withdraw the proposed laws governing the central bank, but he makes clear that any assistance will come with tough conditions.
Excerpts after the jump. Read more
Silvio Berlusconi, the Italian prime minister, at last week's G20 summit in Cannes
At the European Commission’s regular mid-day press briefing today, Amadeu Altafaj-Tardio, the spokesman for economic issues, said the Commission’s Italian monitoring team is expected to arrive this week. After agreement Friday in Cannes, the International Monetary Fund will be sending its own team at the end of the month. Read more
At the Ambrosetti forum in northern Italy, Nouriel Roubini, the US-based economist, weighs in on the health of Europe’s banks and sides with IMF chief Christine Lagarde on the need for the sector to raise even more capital.
Poul Thomsen, head of the IMF's misssion to Greece, during a visit to Athens in May
UPDATE: Here’s an interesting take on the same reports by our friends and rivals over at the Wall Street Journal.
As part of the Brussels Blog’s new mission to read brick-sized reports on eurozone bail-outs so you don’t have to, today we bring you the highlights of the 173-page International Monetary Fund review of the Greek crisis – which we reported on in today’s newspaper, but which has lots of other good details worth chewing over.
The first thing we like to turn to when getting these kinds of reports is the analysis of just how big the financing hole is for Greece – and how international lenders intend on filling it.
According to page 62 of the report (see the pdf here), the IMF has a slightly lower estimate of how big the Greek hole is than the European Commission: it believes Athens will need €103.4bn in new bail-out funds through 2014, while the Commission thinks it will be closer to €115bn.
Potentially more interesting, however, is how they propose to fill the hole. Read more
Acting IMF chief John Lipsky arrives for EU meetings in Luxembourg on Monday
Did the International Monetary Fund really mean to take a swipe at Europe’s continued bickering over how to deal with private holders of Greek bonds? According to John Lipsky, the Fund’s acting managing director, the tough language may have been the result of an editing hiccup. Read more
Greek riot police confront protestors in front of parliament in Athens on Wednesday
Just as one Greek crisis appears to be dissipating, another one flares up that risks pushing Athens into default in a matter of weeks. For those struggling to follow along, here’s another one of our quick primers – and a guide for what to watch for in the coming days.
For much of the last month, officials have been fretting that unless they can piece together a new €120bn bail-out for Greece by next week, Athens would run out of money. The first default by an advanced economy in 60 years would ensue, potentially wreaking havoc across the eurozone.
The reason behind the fear was a complicated domino effect that started with the International Monetary Fund: the IMF was going to withhold its €3.3bn in aid due this month unless the European Union could ensure Greece could pay its bills for another year. Greece, however, is going to be unable to pay its bills next year without a new bail-out. Read more
A decision about how to keep Greece solvent is coming to a head, and for those keeping tabs, here’s a quick primer on what to watch for in the next few days. Read more