What is legal basis to use EFSM? The treaties establishing the new rescue fund ruled out the use of the previous EFSM to rescue a eurozone member. Mr Dombrovskis is asked on what the legal basis is for using the moribund fund. "Given the very difficult situation, and given the urgency, and given the way we are addressing the real concern, I think it is still possible," he says. "There are technical interpretations of this decision. There is a political problem that needs to be addressed. At the end of the day, the decision is to be made by the Council. Currently, we don't have better solutions on the table." He adds that by just helping one eurozone country, and not the bloc as a whole, the Commission can get round its own prohibition.
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IMF: Europeans have to think about breaking Treaty law over Greek debt
Last night, the IMF was forced into publishing its latest debt sustainability analysis for Greece, after the "secret" report was leaked to Reuters.
The findings do not not make pretty reading for the EU (you can read the whole thing here) and AEP's take on it here.
Some interesting excerpts:
• Debt will peak at 200pc of GDP in the next two years. This contrasts with earlier projections of a peak at 177pc
• The IMF doesn't really think Greece can ever meet its ambitious primary budget surplus targets. "Few countries have managed to do so", they admit
• Two weeks of bank closures and capital controls have wrought havoc on the economy; banks will now need recapitalising to the tune of €25bn
• Europe has to start countenancing "deep upfront haircuts" for Greece (something Germany has said is illegal under the Treaties of the euro)
• If that's unpopular, the alternative is even more politically toxic. The IMF tout the notion that Europe's creditor nations will have to provide "explicit annual transfers to the Greek budget"
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