Latviski English По-русски
Wednesday 18.07.2018 | Name days: Rozālija, Roze

IMF preparing eurozone rescue plan

(+1 rating, 1 votes)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU

Initial draft plan stipulating the rescue of the debt-stricken eurozone was agreed on during the International Monetary Fund’s (IMF) annual summit on Sunday, September 25, in Washington (U.S).

During the summit, the rescue plan’s approval time was coordinated, also identifying its extent, BBC reports in reference to unofficial sources in Washington.

The measure that could lead the eurozone out of the crisis is likely to be reviewed in Brussels, at the European Union (EU) Council’s meeting this October. It could be revised later in November during the «Big Twenty» summit, which is to take place in Cannes.

Moreover, according to the BBC’s information sources, the eurozone’s rescue plan also provides writing off 50% of the Greek sovereign debt, as well as significantly increasing the size of the European Financial Stability Facility. At the moment, it comprises 440 billion euro; however, it could further amount to two trillion euro. Instead of the usual mechanisms that should be approved by all national parliaments in the EU, this will be done at the expense of the European Central Bank’s (ECB) loans. These funds would be used to bail out countries no longer capable of easily getting loans from commercial lenders.

At the summit, many experts expressed confidence that two trillion euro is the minimum amount necessary to ensure effective operations of the Facility. Moreover, Italy’s need for assistance in the coming years should be taken into account.

BNN analysts conclude that the idea of boosting the European Financial Stability Facility through the European Central Bank will also affect the eurozone’s taxpayers who will have to indirectly shoulder debt risks. Besides, national parliaments may not like the fact that they are deprived of the voting power in deciding on such an important issue. It is already clear that implementation of the proposed measures will be more than difficult. While the consequences of possible failure will certainly reflect on the entire world.

Due to Greece’s massive budget deficit, Athens is unable to repay its debts, thereby relying on the IMF’s financial assistance. The Greek government continues to receive funds from the IMF’s rescue package, which was approved in May 2010. Whereas, if the country does not reduce the amount of expenditure, as required by the lenders, it may not get the next part of the loan. In this scenario, which is also highly possible, Greece will be unable to pay its obligations already in mid-October 2011.

With the aim to save Greece, the IMF offers writing off half of its debt. Such a possibility was already recognized by the Greek government, saying it would be the best possible solution.

Similarly, it was decided to recapitalize and strengthen the eurozone banks. Although this move will bring along enormous difficulties, there might not be any other option, given that banks in particular will have to deal with losses stemming from writing off 50% of funds lent to Greece. The question on how the aid will be provided to banks remains unanswered.

At the same time, the measures discussed in Washington are only at the initial stage and work on the eurozone’s rescue will continue.

BNN predicts that the situation could be further complicated by Italy’s economic hardships. The fact that Italy needs assistance is confirmed by the international rating agency Standard&Poor’s unexpected downgrade of Italy’s long-term credit rating by one notch – from A+ to A with a negative outlook. This might heighten financial markets’ concerns over the debt crisis spread in the eurozone.

The news agency BNN already reported that the EU leaders have been lately focusing on the eurozone’s debt crisis and the euro stability, although several economists and financial experts called these efforts insufficiently aggressive.

There have been assumptions that the euro could collapse. For example, SEB analysts claim that the EU has to decide in the nearest term either to entirely give up the euro or to strengthen the unity of institutions, which previously did not receive political support.

In their view, the main economic argument against the euro has been that the eurozone is not an optimal currency union, as there are too large differences among its member states.

Moreover, BNN analysts have observed that imbalance is further deepening, as confirmed by recent trends in the eurozone.

Leave a reply

House arrest of Russian theatre director Serebrennikov extended

A court in Russia prolonged the house arrest of Kirill Serebrennikov, a leading Russian theatre and cinema director, until August 22 as he waits for a criminal trial charged with of embezzlement of state funds.

NCP picks Jurašs, Strīķe, Bordāns, Feldmanis and Šuplinska as its headliners

Latvia’s New Conservative Party has picked Juris Jurašs, Juta Strīķe, Jānis Bordāns, Krišjānis Feldmanis and Ilga Šuplinska as its headliner candidates for Saeima elections.

Bank: residents spend an average of 50 to 100 euros on health every quarter

84% of residents aged 18 to 74 have used medical services in the past three months. Only 5% of all costs were covered by health insurance, according to a survey by Norvik Banka.

Countries sign third Rail Baltica co-financing agreement

Connecting Europe Facility co-financing agreement for the construction of Rail Baltica railway infrastructure was signed by participating member states on 13 July. The value of the agreement is EUR 130 million. CEF’s contribution will reach EUR 110 million, which is equal to 85% of all applicable costs, as confirmed by RB Rail communication consultant Ligita Brodiņa.

Saeima plans to increase compensations for child victims

Saeima’s Legal Affairs Committee supported for the third reading amendments that provide for increasing state compensations to child victims.

Sweden asks for help to fight wildfires behind Arctic Circle

Sweden has called for help of European Union neighbours to put out wildfires, some raging in territories behind the arctic circle.

Latvijas Krajbanka administrator recovered EUR 1,038 million in June

The administrator of the liquidated Latvijas Krajbanka recovered EUR 1,038 million in June, which is 6.9 times more than a month prior, according to the official outlook published in Latvian Herald.

Estonians warned of heat wave, high UV radiation

Weather forecasters in Estonia have warned the population of hot weather conditions, because temperatures are forecast to reach 30-31 degrees Celsius this week.

Minister says police have leads in Bunkus murder case

Police have found new leads in the murder case of former insolvency administrator Mārtiņš Bunkus, said Interior Affairs Minister Rihards Kozlovskis in an interview to 900 seconds programme of LNT.

Average EU market prices for dairy products grew in May

Compared to April, dairy product prices in Latvia did not increase in May. In the EU, however, average market prices continued growing in May, according to information compiled by Agriculture Ministry’s Market and Direct Support Department.

ECHR: Russia violated human rights in Pussy Riot and Politkovskaya cases

The European Court of Human Rights (ECHR) has found Russia guilty of human rights violations in its handling of two high-profile cases – its arrest and conviction of Pussy Riot protest group in 2012 and the investigation into journalist Anna Politkovskaya's murder.

Draft making eID card a compulsory document from 2023 onward remains inactive

Latvia’s government has yet to review the legislative draft that makes electronic ID card a compulsory personal identification document for all residents of Latvia older than 15.

Latvia imported 7% less cigarettes in five months of 2018 than it did a year ago

In the first five months of 2018, Latvia imported 1.828 billion cigarettes, which is 7% less than the amount imported in the same period of last year, according to data compiled by the State Revenue Service.

EU's largest free trade agreement signed with Japan

A free trade agreement between the European Union and Japan has been signed and is to apply to close to a third of the world's gross domestic product and the economic activity to 600 million people.

Will Latvians know who elects their president? Draft on open vote «on the move»

On Tuesday, 17 July, Saeima’s Legal Affairs Commission decided to submit for the first reading amendments to the Constitution of the Republic of Latvia that provide for holding election of the country’s president in the Saeima through an open vote, as reported by the parliament’s press-service.

Schengen information system to help prevent tractor theft cases in Latvia

Latvia’s Cabinet of Ministers has supported amendments to the Operation of the Schengen Information System developed by the Interior Affairs Ministry. The aim of those amendments is providing access to the system to ensure public order and security in member states, the ministry explains.

Ministry declares no more free plastic bags for shoppers

From 1 January 2019 onward supermarkets will no longer provide plastic bags to customers free of charge. This will not apply to very light plastic bags, as confirmed by Latvia’s Environment Protection and Regional Development Ministry.

EY auditor’s work in ABLV Bank’s liquidation will be managed by its Polish office

The work of EY work in ABLV Bank’s liquidation process will be managed by its Polish office, as confirmed by company’s representatives.

Estonia sees no geopolitical change after U.S.-Russian summit in Helsinki

Estonian Foreign Minister Sven Mikser has commented cautiously that the U.S.-Russia summit in Helsinki is unlikely to bring fundamental change in the relations between the West, NATO military alliance and Russia.

airBaltic carried record large number of passengers in June

Latvia’s national airBaltic airline carried 1,876,839 passengers to destinations in Europe, Scandinavia, Russia, CIS countries and the Middle East in the first six months of 2018. This is 20% more when compared to the same period of last year, as BNN was told by the company.

Police to investigate possible MPC fraud at Tukums DH CHP plant

One of the largest CHP plants in Kurzeme – SIA Tukums DH – may have been squandering produced heating energy for a long time, which is a serious breach of mandatory procurement component governing rules, TV3 news reports.

Estonian holidaymakers die in Ukraine, media report

Three Estonian holidaymakers in Ukraine, have been found dead in a hotel in the Black Sea resort town of Odessa last weekend, Estonian media report without identifying the three young men.

Languages «a must-have». An interview with ex-president about political market methods and communist approach

There are two ways a political market is realized during closed presidential elections: one involves approval of candidates in exchange for votes, and the other – for money. If it’s the latter, it is best for no one to know how elections are performed. Harmony, which now stays quiet about open elections, has always been against this proposal, because it does not allow for creating a political market – sale of votes in exchange for influence, which has been done before...

Migration from Baltics, Eastern Europe to UK lowest in years

Migration to the UK from the Baltics and other member states of the European Union has been the lowest it has been for nearly four years in 2017, Britain's official statistics show.

Putin in Helsinki denies U.S. election meddling, Trump doesn't object

At the Russia-U.S. summit Helsinki, a key development has been differences in the attitude by U.S. federal officials to Russian interference in the American election process. Days after Washington charged 12 Russians with hacking the computer systems of U.S. officials, U.S. President Donald Trump has accepted the denial of Russian responsibility expressed by Russian President Vladimir Putin.