The International Monetary Fund downgraded its 2023 outlook for the world economy, suggesting that next year "will feel like a recession" for many thanks to central bank reactions around the world.
The lending agency of 190 countries said Tuesday morning that global economic growth would be a meagre 2.7 per cent in 2023, down from the 2.9 per cent they'd estimated in July. For comparison, the world economy grew by six per cent in 2021. The IMF cited Russia's war in Ukraine, chronic inflation pressures, punishing interest rates and the lingering consequences of the global pandemic.
"The worst is yet to come," said IMF chief economist Pierre-Olivier Gourinchas.
The head of the International Monetary Fund warned Thursday that Russia’s war against Ukraine was weakening the economic prospects for most of the world’s countries and called high inflation “a clear and present danger” to the global economy.
IMF Managing Director Kristalina Georgieva said the consequences of Russia’s invasion were contributing to economic downgrades for 143 countries, although most of them should continue to grow. The war has disrupted global trade in energy and grain and is threatening to cause food shortages in Africa and Middle East.
Georgieva made her comments in a speech on the eve of next week’s spring meetings of the IMF and the World Bank in Washington.
The International Monetary Fund approved on Wednesday a three-year, $688 million program for Suriname, with some $55 million enabled for immediate disbursing.
“The program aims to rebuild Suriname’s foreign reserves, IMF Managing Director Kristalina Georgieva said in a statement. “The authorities’ decision to move to a market-determined exchange rate will strengthen the economy’s resilience to external shocks. This step, together with the program’s catalytic effect on external financing, will address external imbalances and contribute to increasing foreign reserves to prudent levels.”
In September 2006, Nouriel Roubini told the International Monetary Fund
what it didn’t want to hear. Standing before an audience of economists
at the organization’s headquarters, the New York University professor warned
that the U.S. housing market would soon collapse — and, quite possibly,
bring the global financial system down with it. Real-estate values had
been propped up by unsustainably shady lending practices, Roubini
explained. Once those prices came back to earth, millions of underwater
homeowners would default on their mortgages, trillions of dollars worth
of mortgage-backed securities would unravel, and hedge funds, investment
banks, and lenders like Fannie Mae and Freddie Mac could sink into
insolvency.
Of
course, the ensuing two years turned Roubini’s prophecy into history,
and the little-known scholar of emerging markets into a Wall Street
celebrity.
A decade later, “Dr. Doom” is a bear once again. While many investors bet on a “V-shaped recovery,” Roubini is staking his reputation on an L-shaped depression. The economist (and host of a biweekly economic news broadcast) does
expect things to get better before they get worse: He foresees a slow,
lackluster (i.e., “U-shaped”) economic rebound in the pandemic’s
immediate aftermath. But he insists that this recovery will quickly
collapse beneath the weight of the global economy’s accumulated debts.
Specifically, Roubini argues that the massive private debts accrued
during both the 2008 crash and COVID-19 crisis will durably depress
consumption and weaken the short-lived recovery. Meanwhile, the aging of
populations across the West will further undermine growth while
increasing the fiscal burdens of states already saddled with hazardous
debt loads. Although deficit spending is necessary in the present
crisis, and will appear benign at the onset of recovery, it is laying
the kindling for an inflationary conflagration by mid-decade. As the
deepening geopolitical rift between the United States and China triggers
a wave of deglobalization, negative supply shocks akin those of the
1970s are going to raise the cost of real resources, even as
hyperexploited workers suffer perpetual wage and benefit declines.
Prices will rise, but growth will peter out, since ordinary people will
be forced to pare back their consumption more and more. Stagflation will
beget depression. And through it all, humanity will be beset by
unnatural disasters, from extreme weather events wrought by man-made
climate change to pandemics induced by our disruption of natural
ecosystems.
The COVID-19 pandemic is inflicting high and rising human costs worldwide, and the necessary protection measures are severely impacting economic activity. As a result of the pandemic, the global economy is projected to contract sharply by –3 percent in 2020, much worse than during the 2008–09 financial crisis. In a baseline scenario--which assumes that the pandemic fades in the second half of 2020 and containment efforts can be gradually unwound—the global economy is projected to grow by 5.8 percent in 2021 as economic activity normalizes, helped by policy support.
The IMF also announced country-specific estimates, including a 5.3% plunge in Brazil, the deepest one-year decline in over a century, and a 6.3% fall in Ecuador.
The International Monetary Fund said on Saturday it will continue talks with Ukraine about a new support program in coming weeks following significant progress in discussions so far with Kiev.
The U.S.-China trade war will cut 2019 global growth to its slowest pace since the 2008-2009 financial crisis, the International Monetary Fund warned on Tuesday, adding that the outlook could darken considerably if trade tensions remain unresolved.
The euro area of 19 countries including Germany, France and Italy is
forecast to slow from a growth rate of 2.1% this year to 1.9% in 2019
and 1.7% in 2020, as the wider region enters a period of weaker growth following the strongest year of the past decade in 2017.
It comes as the wider global economy is unsettled by Donald Trump’s trade disputes with China and Europe, which have reduced demand for manufactured goods and stifled business investment.
Despite the weaker outlook for the British economy, growth figures have
shown Britain managing a better performance than the eurozone over
recent quarters.
Statistics due on Friday are expected to show UK economic growth of
0.6% for the third quarter. Economists at HSBC believe Germany is likely
to record its first drop in quarterly economic output, of 0.1%, for
more than three years.
In the IMF’s latest health check on the region, it warned the European economy would probably run into turbulence in the next few years.
The Washington-based fund said all likely Brexit outcomes would have a negative cost for the economy, although it warned a no-deal scenario would have the biggest downsides.
“No-deal Brexit would lead to high trade and non-trade barriers
between the UK and the rest of the EU, with negative consequences for
growth,” it said.
The IMF also warned the populist Italian government to tackle its high levels of government borrowing before time runs out.
For decades, the global economy has been defined by dissonan
There
has been the Japanese recession. The financial crises in the United
States and Europe. And drama in emerging markets throughout.
But
as central bankers, finance ministers and money managers descend on
Washington this week for the fall meetings of the International Monetary
Fund, they will confront an unusual reality: global markets and
economies rising in unison.
Never
mind political turmoil, populist uprisings and threats of nuclear war.
From Wall Street to Washington, economists have been upgrading their
forecasts for the global economy this year, with the consensus now
pointing to an expansion of more than 3 percent — up noticeably from 2.6
percent in 2016.
Economists
from the I.M.F. are likely to follow suit when the fund releases its
biannual report on the global economy on Tuesday.
The
rosy numbers are noteworthy. But what’s more startling is that
virtually every major developed and emerging economy is growing
simultaneously, the first time this has happened in 10 years.
“In
terms of positive cycles, it is difficult to find very many precedents
here,” said Brian Coulton, the chief economist at Fitch, the debt
ratings agency. “It is the strongest growth we have seen since 2010.”
In
Japan, a reform-minded government and aggressive action by the central
bank have pushed growth to 1.5 percent — up from 0.3 percent three years
ago.
In
Europe, strong domestic demand in Germany and robust recoveries in
countries like Spain, Portugal and Italy are expected to spur 2.2
percent growth in the eurozone. That would be more than double its
average annual growth in the previous five years.
"Aggressive
infrastructure spending by China; bold economic reforms by countries
including Brazil, Indonesia and India; and rising commodities prices
(helping countries such as Russia) have spurred growth in emerging
markets.
And
in the United States, despite doubts about President Trump’s ability to
pass a major tax bill, the economy and financial markets chug along.
In
fact, one of the few large economies not following an upward path is
Britain, whose pending exit from the European Union is taking a toll.
Having grown at an average annual pace of just over 2 percent from 2012
to 2016, the British economy is expanding just 1.5 percent this year.
Still,
the good news may result in some backslapping this week for policy
makers and regulators more accustomed in recent years to putting out
financial fires than basking in improved economic well-being.
“The
meetings will celebrate this period of synchronized economic growth and
calm financial markets,” said Mohamed A. El-Erian, chief economic
adviser to the fund giant Allianz.
There are plenty of reasons to hold off on uncorking the Champagne. Wage gains have been slow in coming.
And most experts think the current sweet spot of positive growth, low
inflation and accommodating central bank policies could be fleeting. Mr.
El-Erian, for example, said he was nervous about several possibilities:
that global growth could taper off; that prices of stocks, bonds and
other financial assets are unsustainably high; and, most important, that
markets might not be prepared when central banks reverse their efforts
to stimulate economies by keeping interest rates low and buying huge
sums of assets.
But
for the time being, investors, economists and policy officials point to
a growing quantity of data that highlight the power of this recent
burst of economic growth.
Business sentiment in Japan and Europe is at 10-year highs. And last month, manufacturing activity in the United States hit its highest level in 13 years.
A
big driver for growth in emerging markets, said Mr. Coulton, the
economist at Fitch, has been Chinese imports, which are up more than 10
percent this year. China is the world’s largest consumer of raw
materials such as oil, steel and copper, and it is increasingly buying
them from emerging economies.
Global
portfolio managers like Rajiv Jain of GQG Partners, who oversees $9
billion, have been quick to capitalize, snapping up shares of Russian
banks and French construction companies.
“The global economy looks pretty darn good,” Mr. Jain said.
But
with interest rates still historically low, investors have been pushing
into even riskier assets, including the bonds of emerging-market
economies, to eke out returns.
Some
countries are taking advantage of the frenzy by issuing more debt.
Argentina recently sold so-called century bonds, which don’t come due
for 100 years. Jordan and Ukraine issued government bonds that mature in
30 years and 15 years, respectively.
Susan
Lund, an expert on global financial trends at the McKinsey Global
Institute, said these types of investments from global asset managers
tended to be longer term — and thus less destabilizing — than the
so-called hot money from commercial banks that contributed to recent
debt crises in the United States and Europe.
Are things getting too hot? “We
are in a boom today, but we should not forget that the financial system
is still relatively unstable,” said Jim Reid, a credit strategist at
Deutsche Bank.
Pick
your poison: an abrupt slowdown in China, the rise of populism, debt
problems in Japan or an ugly outcome to Britain’s move to leave the
European Union.
His
overriding worry, though, is that investors and policy makers aren’t
prepared for what will happen when global central banks put a halt to
their easy-money policies
Since
the 2008 crisis, Mr. Reid noted, central banks have accumulated more
than $14 trillion in assets — an amount that exceeds the annual output
of China by $3 trillion.
What happens when the central banks all start to sell?
“This is unprecedented,” Mr. Reid said. “And no one knows what the outcome will be.”
Note EU-Digest: Could this be the calm before the storm, as political and social unrest starts peaking? It seems very familiar based on previous recessions.
The International Monetary Fund has cut its growth forecast for the
UK economy this year after a weak performance in the first three months
of 2017.
In its first downgrade for the UK since the EU referendum in June
last year, the IMF said it expected the British economy to expand by
1.7% this year, 0.3 points lower than when it last made predictions in
April.
Maurice Obstfeld, the IMF’s economic counsellor, pointed to a marked
change in early 2017. He said the UK’s growth forecast had been lowered
based on its “tepid performance” so far this year, adding: “The ultimate
impact of Brexit on the United Kingdom remains unclear.”
The IMF left its growth forecast for the UK in 2018 unchanged at 1.5%
but said one key risk facing the global economy was that the Brexit
talks would end in failure.
It contrasted its gloomier outlook for the UK with a rosier forecast for the rest of the EU, with 2017 growth upgrades for the four biggest eurozone countries – Germany, France, Italy and Spain.
Germany has been revised up by 0.2 points to 1.8%, France by 0.1
points to 1.5%, while Italy and Spain have both been revised up by 0.5
points to 1.3% and 3.1% respectively.
The Fund produces a world economic outlook in April and October to
coincide with its spring and annual meetings, but provides updates in
January and July.
Launching
the report in Kuala Lumpur, Obstfeld said the IMF had left its global
growth forecasts unchanged at 3.5% in 2017 and 3.6% for next year,
noting that the stronger performance by the eurozone, China and Japan
had been offset by weaker performances elsewhere.
“The recovery in global growth that we projected in April is on a
firmer footing; there is now no question mark over the world economy’s
gain in momentum,” Obstfeld said.
“From a global growth perspective, the most important downgrade is
the United States,” he said.
“Over the next two years, US growth should
remain above its longer-run potential growth rate. But we have reduced
our forecasts for both 2017 and 2018 to 2.1% because near-term US fiscal
policy looks less likely to be expansionary than we believed in April.”
A March IMF policy paper on Labour and product market reforms in advanced economies: fiscal costs, gains, and support
postulated that, “persistently sluggish growth has led to growing
policy emphasis on the need for structural reforms that improve the
functioning of labour and product markets in advanced economies”.
Amongst the reforms considered are “lower entry barriers for firms” and
“reducing the level or duration of unemployment benefits where
particularly high” during weak cyclical conditions.
Its main findings included that such reforms can raise output and
thus strengthen public finances, for example, “unemployment benefit
reforms improve fiscal outcomes both indirectly and directly through
lower spending.” In line with IMF policy, the report makes a case for
temporary fiscal stimulus but only where there is “available fiscal
space” (see Update55), although “a strong commitment to reforms is an essential prerequisite.”
Commenting on the paper, Cambridge University political scientist
Bernhard Reinsberg found that “it is laudable that the IMF acknowledged
that fiscal stimuli may be necessary not only to stimulate the economy
after a financial crisis but also to facilitate structural reform.”
However, he questioned the study’s assumption that labor market reforms
are necessary to unleash growth. He cautioned that “labor regulations
are vital to the protection of worker interests in marginalised places
of the global economy. The results presented in the IMF staff note thus
cannot be applied to the majority of countries around the globe.”
On 15 June, Greece’s creditors, Eurogroup, acknowledged the
achievements of the Greek government on the implementation and outcome
of fiscal policy measures.
The release of the next bailout tranche was agreed; more clarity was
provided on the debt relief roadmap as well as next steps towards
boosting growth.
These developments have delivered a positive signal to the markets
and the Greek people, indicating that the Greek economy is steadily
exiting the final stages of a longstanding and harrowing financial
crisis.
For the first time since 2010, Greece’s creditors have pledged to
prioritize a growth-oriented model that entails the participation of the
European Investment Bank in medium- and large-scale investment
projects, as well as the creation of a Greek Development Bank – a
proposal that the Greek government has made since 2015.
The reluctance of the German finance minister, Wolfgang Schaeuble, to
accelerate the conclusion of the bailout review was significantly
addressed after the Greek government, the European Commission, the
French government and the progressive forces in the European
institutions pressured the Eurogroup to agree to Greece’s bailout
review.
The French played a mediating role for the need to develop growth
policies, so that the Greek economy can start warming its engines.
Brexit will not be “without pain”, said the head of the International
Monetary Fund (IMF) Christine Lagarde on Wednesday (18 January), as
more reports emerged of bank relocating jobs from London.
Lagarde welcomed UK prime minister Theresa May's speech on Tuesday, telling the BBC “less uncertainty is certainly better for the UK economy and for the rest of the European Union”.
The first German word I ever learned was Siemens. It was emblazoned on
our sturdy 1950s fridge, our washing machine, the vacuum cleaner – on
almost every appliance in my family’s home in Athens. The reason for my
parents’ peculiar loyalty to the German brand was my uncle Panayiotis,
who was Siemens’ general manager in Greece from the mid-1950s to the late 1970s.
A Germanophile electrical engineer and a fluent speaker of Goethe’s
language, Panayiotis had convinced his younger sister – my mother – to
take up the study of German; she even planned to spend a year in Hamburg
to take up a Goethe Institute scholarship in the summer of 1967.
Alas, on 21 April 1967, my mother’s plans were laid in ruins, along
with our imperfect Greek democracy. For in the early hours of that
morning, at the command of four army colonels, tanks rolled on to the
streets of Athens and other major cities, and our country was soon
enveloped in a thick cloud of neo-fascist gloom. It was also the day
when Uncle Panayiotis’s world fell apart.
Unlike
my dad, who in the late 1940s had paid for his leftist politics with
several years in concentration camps, Panayiotis was what today would be
referred to as a neoliberal. Fiercely anti-communist, and suspicious of
social democracy, he supported the American intervention in the Greek
civil war in 1946 (on the side of my father’s jailers). He backed the
German Free Democratic party and the Greek Progressive party, which
purveyed a blend of free-market economics with unconditional support for
Greece’s oppressive US-led state security machine.
The heavy footprint of US agencies in Greek politics, even going so
far as to engineer the dismissal of a popular centrist prime minister, Georgios Papandreou,
in 1965, seemed to Panayiotis an acceptable trade-off: Greece had given
up some sovereignty to western powers in exchange for freedom from a
menacing eastern bloc lurking a short driving distance north of Athens.
However, on that bleak April day in 1967, Panayiotis’s life was turned
upside down.
He
simply could not tolerate that “his” people (as he referred to the
rightist army officers who had staged the coup and, more importantly,
their American handlers) should dissolve parliament, suspend the
constitution, and intern potential dissidents (including rightwing
democrats) in football stadia, police stations and concentration camps.
He had no great sympathy with the deposed centrist prime minister that
the putschists and their US puppeteers were trying to keep out of
government – but his worldview was torn asunder, leading him to a sudden
spurt of almost comical radicalisation.
A few months after the military regime took power, Panayiotis joined
an underground group called Democratic Defence, which consisted largely
of other establishment liberals like himself – university professors,
lawyers, and even a future prime minister. They planted a series of
bombs around Athens, taking care to ensure there were no injuries, in
order to demonstrate that the military regime was not in full control,
despite its clampdown.
For a few years after the coup, Panayiotis appeared – even to his own
mother – as yet another professional keeping his head down, minding his
own business. No one had an inkling of his double life: corporate man
during the day, subversive bomber by night. We were mostly relieved,
meanwhile, that Dad had not disappeared again into some concentration
camp.
My enduring memory of those years, in fact, is the crackling sound of
a radio hidden under a red blanket in the middle of the living room in
our Athens home. Every night at around nine, mum and dad would huddle
together under the blanket – and upon hearing the muffled jingle
announcing the beginning of the programme, followed by the voice of a
German announcer, my own six-year-old imagination would travel from
Athens to central Europe,
a mythical place I had not visited yet except for the tantalising
glimpses offered by an illustrated Brothers Grimm book I had in my
bedroom.
Deutsche Welle, the German international radio station that my
parents were listening to, became their most precious ally against the
crushing power of state propaganda at home: a window looking out to
faraway democratic Europe. At the end of each of its hour-long special
broadcasts on Greece, my parents and I would sit around the dining table
while they mulled over the latest news.
I didn’t fully understand what they were discussing, but this neither
bored nor upset me. For I was gripped by a sense of excitement at the
strangeness of our predicament: that, to find out what was happening in
our very own Athens, we had to travel, through the airwaves, and veiled
by a red blanket, to a place called Germany.
ur European Union is disintegrating.Should
we accelerate the disintegration of a failed confederacy? If one
insists that even small countries can retain their sovereignty, as I
have done, does this mean Brexit is the obvious course? My answer is an
emphatic “No!”
Here is why: if Britain and Greece were not already in the EU, they
should most certainly stay out. But, once inside, it is crucial to
consider the consequences of a decision to leave. Whether we like it or
not, the European Union is our environment – and it has become a
terribly unstable environment, which will disintegrate even if a small,
depressed country like Greece leaves, let alone a major economy like
Britain. Should the Greeks or the Brits care about the disintegration of
an infuriating EU? Yes, of course we should care. And we should care
very much because the disintegration of this frustrating alliance will
create a vortex that will consume us all – a postmodern replay of the
1930s.
It is a major error to assume, whether you are a remain or a leave
supporter, that the EU is something constant “out there” that you may or
may not want to be part of. The EU’s very existence depends on Britain
staying in. Greece and Britain are facing the same three options. The
first two are represented aptly by the two warring factions within the
Tory party: deference to Brussels and exit.
They are equally calamitous
options. Both lead to the same dystopian future: a Europe fit only for
those who flourish in times of a great Depression – the xenophobes, the
ultra-nationalists, the enemies of democratic sovereignty. The third
option is the only one worth going for: staying in the EU to form a
cross-border alliance of democrats, which Europeans failed to manage in
the 1930s, but which our
The European recovery remains on track, despite turbulence in China,
according to EU Commissioner Pierre Moscovici. But he also warned
against complacency.
In an exclusive interview with EurActiv at the World Economic Forum
in Davos, Moscovici urged Greece to be more ambitious with its pension
reform.
Pierre Moscovici is EU Commissioner for Economic and Financial Affairs, Taxation and Customs. He spoke to EurActiv's Jorge Valero.
You met with Prime Minister Alexis Tsipras at the World
Economic Forum. The pension reform is the big issue on the table. Are
you asking only for some fine-tuning of the reform, or are your
objections more substantial?
I had a 15 minute-long meeting with Tsipras, which is a long meeting
here in Davos. We are trying to work on what could be a global approach.
We did not enter into specifics. It is not up to me to negotiate the
precise parameters of a pension reform at this stage.
The Greek authorities and the European partners want to go on in
building a success story in Greece, which means a full implementation of
the programme, and strong reforms leading to a rapid conclusion of the
first review, so that we can go on with the programme, and start the
debate on alleviating the debt service under good conditions.
All with the presence of the IMF, which I think is a necessity for
the Europeans. The IMF is part of the security of the programme, and a
guarantee for its future.
I discussed with Tsirpas how this success story could go on. Of
course, I insisted on an approach step by step. This means succeeding in
the first step, which is what is necessary to conclude the first review
and mostly the pension reform, and the implementation of the
privatisation fund.
Given that Europe faces numerous challenges, and it would be
difficult to handle another crisis like in the past year, would there be
some leeway from the creditors to avoid another Greek tragedy?
We don’t have to alleviate our demands.
We have a roadmap, the
memorandum of understanding which is based on the July agreement. We
have to fulfill it.
But obviously, the climate and working conditions, the relationship
between the institutions, the member states and the Greek government
have changed positively since July. To sum up what I said to Alexis
Tsipras: we must keep the momentum.
Let’s not enter in the atmosphere of drama or any kind of ‘Grexit’
scenario. We were too close to Grexit in the summer. We avoided that.
We don’t want to re-enter into that. On the contrary, let’s keep the
momentum by advancing with the programme.
Therefore, we need an ambitious pension reform. We are not there yet,
but I am confident that with goodwill and strong technical manage we
can get there.
A staff discussion note
published recently by the IMF addresses the argument that squeezing
wages across a large part of the euro area is dangerous and deflationary
as it will not improve anyone’s relative competitive position while
undercutting domestic demand everywhere.
Since the IMF has always been a
staunch advocate of the ongoing euro area experiment of substituting
currency devaluation with wages devaluation, it is worth taking a closer
look at its work.
The IMF bases its findings on a simulation whereby nominal wage growth
in a set of five countries representing an economic weight of 30% of the
euro area (Greece, Italy, Spain, Portugal, Ireland) is reduced by 2
percentage points over the course of two years. Importantly, this
simulation is carried out under the assumption that the ECB’s hands as
regards cutting its interest rates are tied because these rates are
already hitting the zero mark. It is also assumed that lower wages
growth is fully passed on into domestic prices, implying that there are
no cuts in real wages.
Note EU-Digest: QE - Money printing presses going full speed and major dangers lie ahead for the US, EU and Japanese economies. When they come they will make the 2007/2009 economic crises look like child's play.
On Tuesday, the Greek Finance Ministry said its government and the
international creditors managed to agree on the two major issues – a new
privatization fund that will accumulate state assets worth around €50
billion over the next 30 years and the game plan to tackle the problem
of overdue loans totaling €90 billion.
Negotiations on the
technical agreement will conclude later on Tuesday. European Commission
President Jean-Claude Juncker will speak with French President Francois
Hollande and German Chancellor Angela Merkel later today, FT reports.
Earlier,
it was reported that the two sides had agreed on a target for 2015 of a
primary budget deficit of 0.25 percent of GDP, moving to a primary
surplus in 2016 of 0.5 percent of GDP. In 2017, the primary surplus
target is 1.75 percent, rising to 3.5 percent in 2018, ANA news agency
reported.
On Tuesday, the Greek Finance Ministry said its government and the
international creditors managed to agree on the two major issues – a new
privatization fund that will accumulate state assets worth around €50
billion over the next 30 years and the game plan to tackle the problem
of overdue loans totaling €90 billion.
Negotiations on the
technical agreement will conclude later on Tuesday. European Commission
President Jean-Claude Juncker will speak with French President Francois
Hollande and German Chancellor Angela Merkel later today, FT reports.
Earlier,
it was reported that the two sides had agreed on a target for 2015 of a
primary budget deficit of 0.25 percent of GDP, moving to a primary
surplus in 2016 of 0.5 percent of GDP. In 2017, the primary surplus
target is 1.75 percent, rising to 3.5 percent in 2018, ANA news agency
reported.
It’s official. Nadia Valavani, deputy finance minister, has
resigned from Alexis Tsipras’s government just hours before the
parliament votes on the bailout package. As flagged earlier,
Valavani has told Tsipras that it is “impossible” for her to keep
serving in his government, given the austerity measures he had agreed
to.
In a letter released by the finance ministry, Valavani warned that
Greece faced a “crushing” capitulation at the hands of its creditors in
Brussels.
The bailout terms were not a “viable solution” to Greece’s problems, she insisted, warning:
The solution imposed today in such a depressing way is not sustainable for the Greek people and for the country.
