However, a big debt repayment does not come until July so negotiations will drag on and on. In the past, there was always a last minute deal. Will it be any different this time?
"After nearly eight hours of talks and multiple draft compromises, Athens and its creditors couldn’t reach an accord that would ease Greece’s debt and that would convince the International Monetary Fund to agree to help finance the country’s bailout.
The IMF has been seeking more debt relief for the country, pushing euro-area creditors to ensure the sustainability of Greece’s 315 billion euros ($354 billion) of obligations before it participates in the program. Some nations including Germany object to a debt restructuring while also insisting that the Washington-based fund join the program to lend credibility to the bailout.
Greek and EU officials said that a proposed final compromise was considered too vague by the Athens delegation, which rejected the draft plan arguing it wouldn’t bring sufficient certainty on the country’s debt prospects.
Greece doesn’t have a large maturity deadline until July, when about 7 billion euros in obligations come due, but delaying the resolution of the program review adds to months of uncertainty that have taken their toll on the Greek economy — which has slipped back into recession — and kept the country from returning to the bond market.
The IMF and Germany disagreed over Greece’s economic outlook and the amount of debt relief required to assure economic stability, according to two European Union officials with knowledge of the talks, who asked not to be identified because the discussion was private.
A key issue of contention is the forecast for Greece’s economy after 2018, when the current bailout expires. The IMF has raised doubts about Greece’s ability to maintain such an optimistic budget performance for decades, while key creditors have been pushing for a more positive outlook. Less ambitious fiscal targets would increase the amount of debt relief needed."
Greece Back in Recession
Even if Greece was not in a recession there is no Greece can pay back what is owed.
Germany knows that full well, but it cannot give Greece any relief, especially with national elections coming up.
Has Anything Changed?
Greece cannot pay back its debt obligations so that aspect has not changed.
The IMF has threatened before to pull out of talks but always caves in at the end. Typically, in these debt negotiations, Germany tosses Greece some meaningless tidbit and the IMF goes along.
One difference this time is Tump does not appear to want a deal to save Greece. But with Trump, who really knows?
Yet, somehow these negotiations seem different. There is no panic and no fear. The market is not fixated on the event.
One wonders if anyone gives a rat’s ass if Greece leaves the Eurozone or not. A sense of complacency has replaced all the 11th hour fearmongering.
Most expect the IMF to cave in, simply because it always has.
What better time than now for the IMF to throw Germany a major curveball?
Mike “Mish” Shedlock