RGE Strategy Flash: Implications of the EMU/IMF Greece Deal

• On March 25, the Heads of State of the Eurozone reached an agreement on the principles for emergency lending to sovereign states in the single currency area in the event of a state failing to raise funds in the capital markets. The agreement represents a victory for the German chancellor who—faced with fierce domestic opposition to any bailout of Greece—pushed for an IMF involvement against the prevailing consensus among the heads of the ECB, the Eurogroup and the EU Commission. While no numbers were released in the statement, the details of the fiscal “support” package with respect of Greece imply a majority EMU-financed joint EMU/IMF package. Specifically, there appears to be €22 billion in financing with the zone members providing about €15 billion of that amount, according to their ECB capital key, and the IMF the rest. RGE considers the current deal to be mixed for a number of reasons. Click Here For Full Analysis