Greece makes €200m IMF repayment, but no breakthrough in sight

Graeme Wearden (until 3pm) and Nick Fletcher

from on 2015-05-06 16:51 (#8FM7)

Athens has avoided defaulting on an interest repayment to the International Monetary Fund, but hopes of a deal by Monday's eurogroup meeting are fading

6.48pm BST

Some late news: The European Central Bank's governing council has ended its deliberations.

And the word from Frankfurt is that Greece's banks will be given an extra 2 billion euros emergency liquidity, taking the ELA total up to 78.9bn euros.

Breaking now on Bloomberg: #ECB gives #Greece benefit of doubt for another week, before discussing tighter funding. #eurogroup #may11

5.51pm BST

With talks between Greece and its creditors continuing - and the Brussels group of the ECB, IMF and EU maintaining they are working hard together to find a solution - shares have edged higher, even as bonds across the eurozone continue to slip. Stock markets were also unsettled by comments from US Federal Reserve chair Janet Yellen that equity values were "quite high" and potentially dangerous. However Wall Street reacted more than European markets to this warning. The final scores showed:

5.45pm BST

Increase of #Greece bank #ELA limit by a2 bln is the highest weekly figure since Feb. #economy #ecb #banking #markets

5.26pm BST

And there is even some optimism around about Greece now:

Productive call between Tsipras and @JunckerEU today on key reforms for #Greece. #ECB also upped liquidity assistance. Things looking up?

5.22pm BST

Speculation on the ECB's decision on liquidity for Greek banks:

ECB SAID TO RAISE ELA CEILING FOR GREEK BANKS TO EU78.9BLN

@minefornothing 2bln increase

5.19pm BST

.@yanisvaroufakis has proposed bad bank to take bad loans off bank balance sheets. But bad loans total a72bn who will fund the bank?

5.08pm BST

Some speculation on the timing of the European Central Bank's decision on whether to keep supplying emergency liquidity assistance to Greece's banking sector, following today's meeting:

Decision on ELA for Greece will be communicated in writing around 21:00 CET Wednesday - source.

ECB board discussed various Greece haircut scenario http://t.co/IcAMwzTm3P

4.41pm BST

Back with Greece and former prime minister George Papandreou has added his voice to the current debate:

*PAPANDREOU SAYS GREEK EXIT WOULD HAVE GEOPOLITICAL REPERCUSSION #Greece #Grexit

*PAPANDREOU SAYS GREEK EURO EXIT WOULD CAUSE EUROZONE UNRAVELING #Greece #Grexit

4.26pm BST

Earlier Federal Reserve chair Janet Yellen caused some tremors in the markets by warning about high valuations.

Speaking at a Finance and Society conference in Washington, she said:

I would highlight that equity market valuations at this point generally are quite high. There are potential dangers there.

4.17pm BST

"Concrete progress" is now the aim for Monday's eurogroup meeting, according to a joint statement from the European Commission, the European Central Bank and the International Monetary Fund:

The European Commission, the European Central Bank and the International Monetary Fund share the same objective of helping Greece achieve financial stability and growth.

The institutions continue to work closely together toward that goal.

Greece talks are clearly not going well pic.twitter.com/qS9uJJSh2L

4.11pm BST

The European Central Bank has issued a list of 8 banks which will face stress tests and balance sheet reviews, while Portugal's Banco Novo will face a stress test only. The moves because of their increased systemic significance since the ECB's last health check last year.

ECB Decision On Identifying Credit Institutions That Are Subject To Comprehensive Assessment http://t.co/6F6NGDk3jJ

3.55pm BST

Oil prices have climbed further after US crude stocks fell last week for the first time since January.

Brent crude is now up around 2.4% at $69.14 as the US energy information administration said inventories dropped by 3.9m barrels compared to expectations of a 1.5m increase.

Keeping the crude oil (Brent) rebound in context pic.twitter.com/8cJHFZZAaP

3.24pm BST

Greek finance minister Yanis Varoufakis has said next week's eurogroup meeting could serve as a "platform" for a deal.

Hopes of a real breakthrough at Monday's meeting have pretty much faded but as Varoufakis continued his meetings with EU minister, he held out the hope that it could at least be another step on the road to an agreement. Varoufakis was speaking after a meeting with Italian economy minister Pier Carlo Padoan and said their discussion had given him confidence that an agreement could be reached. He told reporters (quote from Reuters):

We had a very fruitful and intense exchange of views on the best ways to make the eurogroup next Monday a platform to enter into the kind of agreement between Greece and our partners which not only resolves the current negotiations but will lead to a period after June that will allow the Greek economy to recover and grow again.

2.57pm BST

Update: EC President Jean-Claude Juncker and Greek prime minister Alexis Tsipras have just issued a joint statement following their phone call:

It shows that they discussed the key points of difference between Greece and her creditors, and agreed that Greece needs a better pay bargaining mechanism.

President Juncker and Prime Minister Tsipras spoke on the phone today.

They took stock of progress made in the talks between Greece and its partners over the last days on a comprehensive set of reforms to achieve a successful completion of the review. They notably discussed the importance of reforms to modernise the pension system so that it is fair, fiscally sustainable and effective in averting old-age poverty. They also discussed the need for wage developments and labour market institutions to be supportive of job creation, competitiveness and social cohesion. In this context, they concurred on the role of a modern and effective collective bargaining system, which should be developed through broad consultation and meet the highest European standards.

Joint statement by @JunckerEU and Greek PM #Tsipras following their phonecall this morning http://t.co/J5K2qheQjF #Greece

2.52pm BST

Another flurry of newsflashes -- revealing that the head of the European Commission, Jean-Claude Juncker, has spoken with the Greek prime minister today:

2.50pm BST

Have you wondered how Greece keeps meeting its debt repayments and other bills, despite being on the brink of bankruptcy?

Well, the secret is that Athens reverted to the tried and tested route of cutting back on spending, and squeezing as much taxation out as possible.

Not only have tax receipts crept back up to where they're almost at last year's levels (and pre-crisis estimates) for the first quarter of the year, but spending has been slashed to where the government has paid out a1.5bn less than anticipated.

That has produced a primary surplus of a1.7bn, which is a1.6bn ahead of expectations. And that's all cash the government can use to keep itself running while it's trying to hammer out a deal to get the final a7.2bn remaining it its current bailout.

#Greece seems to have found a radical way to avoid default: raise more in taxes and cut spending! A look at new data: http://t.co/Gcdit8FsG3

2.06pm BST

Greece's cash has arrived safely at the International Monetary Fund:

IMF say Greece had made interest payment as expected today.

1.52pm BST

There's no chance of a big breakthrough at next Monday's eurogroup meeting of finance ministers.

That's according to Jeroen Dijsselbloem, head of the eurogroup, a few minutes ago. He warned that there are still "lots of issues to resolve".

DIJSSELBLOEM SAYS NO AGREEMENT EXPECTED MONDAY ON GREECE. - But.. but there is a deadline? pic.twitter.com/UKd9AEZ0zn

1.44pm BST

Newsflashes from Paris... where French finance minister Michel Sapin says the Greek bailout crisis will be resolved, but not soon....

is he ok? :) https://t.co/xkLPTvYQCc

*DAMAGE FOR GREECE IS DAMAGE FOR GERMANY TOO, SCHAEUBLE SAYS

1.32pm BST

As I was saying...

#Greece & the creditors do not agree yet on: - 2015 budget figs - Pension system viability - labor mrkt deregulation ~EU source to @Real_gr

1.30pm BST

Greek media are reporting that the bailout negotiations are making progress on some important issues:

#Greece & creditors are close to agrmnt on: -VAT & tax collection -Privatizations list -Banking sector stability & NPLs ~EU srce to @Real_gr

1.21pm BST

Just in.. US companies created fewer new jobs than expected in April, adding to concerns over its economy.

ADP vs. NFP Private Payrolls: pic.twitter.com/ogOQ3tCbwt

ADP suggests March payroll stumble may extend into April

1.08pm BST

Greece had been hoping that the European Central Bank might grant Athens permission to issue more short-term debt, but will probably be disappointed today.

Currently, Greece is capped from issuing more than a15bn of short-dated Treasury bills. It has pushed for this to be increased to a25bn, creating headroom to cover funding demands over the next few months.

ECB will only agree to raise t-bill threshold for Greece with a firm agreement at eurogroup next Tues, declarations will not be enough

12.55pm BST

Greece's deputy finance minister has been forced to deny newspaper reports that he transferred an estimated a80,000 to a bank in Luxembourg in recent months.

12.54pm BST

Reminder: the European Central Bank's governing council has been discussing Greece this morning, at a regular non-monetary policy meeting.

The ECB must decide whether to extend more emergency liquidity assistance to Greek banks (it probably will), and whether to get tough by imposing a more severe haircut on the assets the banks hand over in return (it probably won't). So analysts are watching Frankfurt closely....

Wednesdays. The days of lunch-in-front-of-the-monitors waiting for ECB's Greek ELA decision.

12.28pm BST

"Constructive" is the word of the week:

*GERMAN FINANCE MINISTRY'S TIESENHAUSEN COMMENTS IN BERLIN: TALKS AMONG GREECE'S CREDITORS ARE CONSTRUCTIVE

12.17pm BST

Back in London, the British financial trader accused of contributing to a multi-billion dollar stock market crash from his parents' home, has appeared in court again.

Nav Sarao failed to persuade a judge to change his bail conditions, saying he cannot meet the 5m security set last month because his funds have been frozen by US authorities.

As he was being led away from the dock he turned to the public gallery, held his arms out wide and declared: "I haven't done anything wrong apart from being good at my job.

"How is this allowed to go on, man?"

Nav Sarao, accused flash crash trader, still in clink; judge says he must pay bail via @journosooz #houndofhounslow pic.twitter.com/yZ3Pvdn2x8

11.58am BST

Yanis Varoufakis continues to make waves - not least in Greece, where the finance minister is now being seen as a very saleable asset.

"Yanis is talented, that is why they are attacking him. He s decent and tells the truth and will fight until he wins at least something."

"Everyone loves him".... [IMF chief Christine] Lagarde likes him very much along with every woman in Greece and Europe."

11.32am BST

The thinktank, National Institute of Economic and Social Research (NIESR) has released its latest forecasts for the UK and world economies today, and it is a mixed bag of news for the eurozone.

NIESR sees brighter prospects for the region as a whole, but big question marks over Greece's chances of staying in the the single currency bloc and what an exit might mean for its neighbours.

"Prospects in the Euro Area have improved; the ECB's monetary policy, the euro's depreciation, and lower oil prices are all expected to support demand and activity in the period ahead, while fiscal policies are expected to be broadly neutral, and the risks of deflation have lessened.

"Nevertheless, economic conditions remain very weak in much of the area, with unemployment extremely high and expected to decline only slowly.

"When you look at data from the Bank of International Settlements it is clear that the exposure of most European banking systems is significantly less than it was in 2011, the start of 2012. Dramatically less, in particular for France and Portugal... However, just because the banking sectors of these countries are significantly less exposed... it doesn't necessarily mean that there is no contagion effect there. Much of this is very opaque, it relies to a large extent on the sentiment of investors in a number of countries and if the view is taken of those countries that are still by and large classified as peripheral Europe, or crisis economies, or whatever phrase you want to use, there clearly is a risk that there will be a negative spillover to these economies. Now, it's significantly less than is was at the end of 2011, in 2012, but the risk is there. So the question then becomes: 'Why go down the path that actually pushes us into the position where we actually give this risk a chance of materialising?'"

"The IMF have said very explicitly ... Greece's debt burden is unsustainable ... so it has to be written off. Now you can write it off... by extending maturities and pretending you are not really writing it down because you are not changing the face value but we all know what's really happening in economic terms."

"Even the Commission's optimistic forecast which was published today [Tuesday, as covered in the live blog here] still shows Greece with a debt burden of about 180% next year. The IMF's message here is, I think, long overdue... Essentially European policymakers ... either want to force Greece out of the euro and take the risk, which, as Simon says, we really cannot quantify very sensibly .... or they are going to have to recognise economic reality, if they want Greece to stay in the euro, an economic reality that is saying significant write-off in some form or other [will be needed]."

11.05am BST

Investors still believe there is a high risk that Greece will default on its debts within the next five years:

Greek 5yr default probability continues to rise as the blame game between #Greece and it's creditors is in full swing pic.twitter.com/I2O316HntO

10.57am BST

Associated Press has also confirmed that Greece is making its a200m repayment to the IMF today (as flagged up early this morning).

Next week's bill will be harder, though.

Greece is making a 200 million euro ($222 million) repayment to the International Monetary Fund, though another, larger one looms next week that it will struggle to manage.

A Greek finance ministry official said Wednesday: "The payment is proceeding normally." The official spoke only on condition of anonymity in line with government regulations.

10.46am BST

Here's Angela Monaghan on the jump in UK service sector growth last month:

10.41am BST

Back in the City, shares in Sainsbury's have slid by 3% to the bottom of the FTSE 100 leaderboard, after it posted its first loss in a decade.

10.27am BST

Here's that story about new possible taxes on Greek super-rich that we mentioned earlier...

.@BILD reports Greek gov't plans to levy special tax against 500 richest Greek families: http://t.co/6hJCq6SCkX pic.twitter.com/c9lruVPF2z

10.24am BST

Greece's unemployment rate has fallen, but still remains alarmingly high.

The seasonally adjusted unemployment rate in February 2015 fell to 25.4%, down from 25.6% in January, according to Elstat. A year ago it was 27.2%.

10.05am BST

Back to Greece, and a new poll has shown that a majority of German executives now believe the eurozone would be better off without Greece.

Mike Bird of Business Insider has the story:

According to Germany's premier business newspaper, Handelsblatt, 44% of the 673 executive-level German managers surveyed think that Greece should leave the eurozone of its own accord.

A further 13% think Greece should be actively ejected from the monetary union.

Handelsblatt poll shows a majority of German executives now want Grexit - 79% see no contagion/domino effect http://t.co/tmNliA6lr5

9.51am BST

Fears that Britain's recovery is faltering have been allayed by the latest survey of UK services firms.

"The services sector offered a more upbeat level of performance than the other sectors this month and demonstrated a continued assurance in the growth of the UK economy.

New business was the primary driver of activity, even amidst increased competition, more marketing activity, the scrabble for good staff and the availability of raw materials."

Big jump in UK services PMI, a strong indicator for UK GDP, when other data pointed to faster slowdown. A Tory boost 24hrs before #GE2015

Waiting for Dave to explain PMIs to the wider electorate. #anythingabove50

9.28am BST

European stock markets have bounced back from yesterday's selloff.

Until now, there may have been a degree of willingness to look beyond the bigger political issues - both in terms of the UK election and what's happening with regard to the Greek debt talks - but it's easy to see how this could mark the start of several downbeat sessions as the market attempts to predict how matters will evolve between now and the start of next week.

9.19am BST

The news that Greece is meeting its a200m repayment to the IMF is welcome, but it's only a small hillock in the mountain of debt repayments that Athens faces this summer:

Reuters is reporting that #Greece has met its a200mn payment to the #IMF, due today. But plenty of payments to go. pic.twitter.com/nhvKebvndw

9.09am BST

This morning's flurry of data shows that eurozone businesses reported pretty solid growth in April as the region's recovery continues.

Strong growth in Spain, and a pick-up in Italy, made up for France's ongoing weakness, according to data provider Markit.

"The survey is signalling a rate of economic growth of approximately 0.4% at the start of the second quarter, similar to that indicated by the PMI in the first quarter.

"The fact that the rate of growth failed to gain further momentum is a disappointment, but the national growth variations will give policymakers some real encouragement that the economic health of the region is improving."

8.59am BST

Growth across Germany's service sector also slowed... with its PMI coming in at 54.0, down from 55.4 in March.

That's also weaker than the 'flash estimate' of 54.4 published two weeks ago; suggesting growth slowed in late April.

*GERMANY APRIL SERVICES PMI FALLS TO 54; PRELIM. 54.4

8.57am BST

Disappointing news from France, though - growth across its private sector has slowed.

The French service sector PMI fell to 51.4 last month, from 52.4 in March. And with its manufacturing shrinking, the overall French Composite PMI fell back to 50.6.

*GERMANY APRIL SERVICES PMI FALLS TO 54; PRELIM. 54.4

8.49am BST

More good news for the eurozone -- Italy's service sector has reported its fastest growth in 10 months.

The Italian service sector PMI jumped to 53.1 last month, up from 51.6 -- on a scale where any reading over 50 shows growth.

#Italy's service sector grows at fastest rate for 10 months. Headline Index at 53.1 (Mar:51.6) http://t.co/7YRmf0QBlP http://t.co/5whZgbyShe

8.36am BST

Back in the bond markets, Britain's headline borrowing costs have hit their highest level of 2015.

#UK 10-year bond yield climbs above 2%; first time since December pic.twitter.com/gkhI1cDdcS /via @moved_average

8.35am BST

Here comes the first Purchasing Managers Index report from the eurozone....and it's good news for Spain.

The Spanish service sector PMI has surged to 60.3 last month, up from 57.3 in March, a really strong reading that shows growth is accelerating.

Oli(C)!

8.29am BST

A major readjustment appears to be underway in the bond market.

Prices of eurozone sovereign debt are falling this morning, pushing up yields, continuing a trend that began late last month:

Sell-off in #Eurozone bonds continue. 10yr govt bond yields of Italy and Spain spike, make fresh 2015 highs. pic.twitter.com/EU2giLaXpy

Global bond markets have lost about $340 billion since the start of last week

8.22am BST

Curious.....Germany's Bild newspaper claims that Athens is planning a special tax on the country's 500 richest families.

good morning! new status symbol? "#Greece's 500 richest families may face special levy: newspaper" https://t.co/v3OJ8IFQSC via @sharethis

8.07am BST

One down, lots more to go....

That's one less - Greece Has Made EU200m IMF Repayment, CNBC Says, Citing Reuters.

7.57am BST

A Greek official has confirmed to Reuters that the a200m interest payment is winging its way to the International Monetary Fund.

"It's done, the money is on its way," the official said, on condition of anonymity.

Cash-strapped Athens is quickly running out of money while it tries to persuade euro zone partners and the IMF to extend further aid. The payment on Wednesday was not expected to be a problem for the country, but a a750m payment to the IMF that falls due on May 12 is expected to be a bigger struggle.

7.50am BST

Newsflash from Athens: Greek officials have just announced that they've met the a200m repayment to the IMF due today - lifting the immediate threat of a default.

Via Reuters:

#Greece makes a200ml repayment to #IMF ~Greek official /via @EM_Equity

#Greece | MAKES a200M REPAYMENT TO IMF-GR OFFICIAL..IMF gives Greece money so that Greece can pay IMF so that IMF can give Greece more money

7.46am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

With relations with its lenders deteriorating, Greece must pull together a200m to meet an repayment to the International Monetary Fund today.

"They are not only implacable, the feeling that they give us is that they are impossible to satisfy."

"They ask for 10 things to be done and then come back the next day and ask for another 10 more. As much as we would like, that's not going to lead to compromise."

Another #ECB Day for #Greece. Central Bank's Gov Council to review ELA to Greek banks. Market expects new small increase & no haircut. Yet.

Sainsbury's falls to first statutory loss in a decade - 72m after property write offs

Sainsburys boss Mike Coupe: "The UK marketplace is changing faster than at any time in the past 30 years which has impacted our profits"

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