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Citigroup: Do not expect meaningful Greek debt relief measures to be agreed in June


Germany wants less debt relief, bigger cash buffer, Citigroup says in a new note to clients. The bank refers to Süddeutsche Zeitungs report, citing a document from European negotiators on Greek debt relief, that one option considered involves offering Greece a cash buffer to settle financial obligations and reduce debt relief from 2019 onwards.

According to the estimate, for every €5bn provided, the agreed loan extensions could be reduced by 2 years. The buffer would allow Greece to service all loans to EU countries and the IMF until 2022, or after the next Bundestag elections.

The existing EU proposal of a €11bn buffer after the programme expires in August would have to be increased.

Citi states that the newspaper also confirms previous speculation that IMF will not participate in the program; IMFs Lagarde said on Monday that the IMF role in the programme will become clearer after the Eurogroup meeting on 21 June, although the Fund will certainly remain engaged one way or another.

According to Citi, the 21 June meeting will be key for Greece’s creditors to decide on the post-bailout strategy. Debt relief remains a very contentious issue in Germany, which has eventually accepted that the IMF will not be part of the programme (a condition it had required since its inception three years ago). “We do not expect meaningful debt relief measures to be agreed in June, aside from some measures to help reducing financing needs and costs over the first few years after the end of the programme”, the bank stresses.


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