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Greece Deterioration Hits Nitrous: IMF, EU, ECB Find Greek Plan €4.8 Billion Short

 February 25, 2010 01:27 PM


Greeks just can't catch a break. Market News reports that a "joint report drafted by the European Commission, the International Monetary Fund and the European Central Bank finds that the calculations contained in Greece's budget plan falls €4.8 billion short of what is needed to meet its deficit cutting objective this year" according to senior Greek government officials. Well, our RBS spin-unadjusted take on this data is bearish to quite bearish for the country's Moody's downgrade prospects, which is the gating factor to utter and total chaos once the GGB are no longer accepted as collateral by the ECB. Not to mention Greece's bond issuance propensity (but anonymous government sources have said about 50 times this week the.bond.is.getting.done), and its Bund spread, which at last check was set to probe recent record wides. In the meantime there is no bank run, repeat NO BANK RUN in Greece.

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And for the benefit of a presumably budget conscious RBS (which just paid itself the same amount in billions as it just cost taxpayers in Q4, somewhere north of $1 billion), here is the balance of the Market News release:

The report asserts that the Greek government is underestimating its debt service payments for this year by E1 billion and is too optimistic in estimating that it can generate an additional E1.2 billion of revenue by cracking down on tax evasion, the sources said.

It also says that Greece will not get as much funding from the EU budget as it projects.

As MNI reported earlier Thursday, Greece has already signed onto E3.5 billion in additional budget cuts and tax hikes to try and plug the gap. However, a top official at the Greek finance ministry said the government will not try to produce the extra E1.3 billion that would be required, for fear of social unrest and of "strangling the economy."

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In any event, the E4.8 billion discrepancy detailed in the report is not necessarily the final and definitive figure, a senior finance ministry source said. The European Commissioner for Monetary and Economic Affairs, Olli Rehn, is expected in Athens Monday to discuss the report and the alleged discrepancy.

Rehn said in Brussels earlier today that he expected to see the report on Friday.

We are looking forward to seeing just how the much anticipated amicable resolution which RBS is so eagerly predicting, unravels.

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