Minister tucks away IMF card
Finance Minister Giorgos Papaconstantinou moved yesterday to dispel talk that Greece is knocking on the door of the International Monetary Fund, as uncertainty regarding how the government will bring an end to the debt crisis weighed on capital markets. Papaconstantinou said all options for getting support were still open, describing as «silly» reports that Athens is getting ready to turn to the IMF. «This is ridiculous,» he told Reuters. «We have said from the beginning that all options are open… we are not any closer now to the IMF [than before].» A Dow Jones Newswires report quoted an anonymous senior Greek official as saying that Athens may apply for IMF aid on the weekend of April 2-4, which would be over the Easter weekend. The report earlier drove the euro down against the dollar. Any move toward the International Monetary Fund would undermine market confidence that the European Union is solidly behind Greece, something that has reduced volatility and lowered the country’s cost of borrowing in recent weeks. Yesterday, however, premium investors’ demand to buy 10-year Greek government debt rather than German Bunds rose as high as 319 basis points, up 16 basis points on the day, as Greek bond yields hit their highest in nearly a week. Greek credit default swaps (CDS) rose to 306 basis points from 287.7 at the New York close, meaning that the cost of insuring 10 million euros of exposure to Greek debt had risen to 306,000 euros. A lack of concrete support from the EU also weighed on the equity market, dragging Greek bank stocks more than 6 percent lower on the Athens bourse. Meanwhile, European Commission spokesman Amadeu Altafaj said in Brussels yesterday that it is normal for Greece not to rule out turning to the IMF for financial help. The EU executive body this week reassured Greece the bloc is ready to help Athens overcome its financial problems but resistance from Germany appears to have blocked the provision of any details as to how this would be achieved.
