The Greek debt saga took another dramatic turn yesterday when creditors and the Greek government rejected each other’s proposals.
Martin Mulligan, UK treasury officer of boutique risk manager Clear Treasury, believes that it is unlikely a near term agreement will be reached. EU officials said yesterday’s talks yielded little in the way of progress and no breakthroughs were in sight.
A document released shows how far the sides are from reaching an accord. The Greek recovery plan has been heavily amended in red ink over parts such as pension reforms. Rather than gradually raising the effective retirement age to 67 by 2025 as Athens has proposed, creditors want that moved up to 2022.
The Greeks are focused on increasing taxes but doubts persist within the creditor group around the Greeks’ ability to collect existing tax, let alone new tax measures.
Talks are taking place today with Greek prime minister, Alexis Tsipras, international monetary fund (IMF) chief Christine Lagarde, European Central Bank President Mario Draghi and EU Commission president Jean-Claude Juncker. For Greece to avoid defaulting on a loan from the IMF a deal needs to be ratified by Greek and German parliaments and for the Greeks to receive the €1.6 billion bailout by June 30.
Unsurprisingly, the Volatility Index is up by 1.75% and Mulligan says: “I would expect liquidity to be thin and ranges to hold until there is definitive news on a Greek debt deal.”
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