Wilson Bennett: Greece’s failure to table reforms acceptable to its creditors has prompted the IMF to walk out of negotiations.
Wilson Bennett says talks between Greece and the IMF (International Monetary Fund) have broken down after the negotiation team walked out saying it would return to Washington citing “major differences” between the two camps.
Greece’s Prime Minister, Alexis Tsipras and his finance minister, Yanis Varoufakis have been negotiating frantically with the IMF and the European Commission over the terms for unlocking the final €7.2 billion instalment of its bailout but it appears to be unwilling to compromise on key reforms and spending cuts demanded by its creditors.
Greece must agree terms for the final tranche before the end of June or it will be unable to make a payment of €1.5 billion to the IMF, resulting in a technical default.
“Things are going down to the wire and a Greek exit from the euro zone looks more and more likely with each passing day,” said Will Sorenson, who heads European markets research at “Wilson Bennett”.
In recent days, rumors have begun to circulate that Greek officials are drawing up plans for the imposition of capital controls to stop the huge outflow of funds as worried Greeks send money abroad to protect against what would likely be rampant inflation in the event of the reintroduction of the drachma.
“There have even been rumblings that officials are discussing the formation of a new Greek central bank, presumably to administer a new currency,” added Sorenson.
“Wilson Bennett” have advised clients to prepare for the potential shockwaves a ‘Grexit’ could send through the financial markets by holding cash and continuing to acquire precious metals.
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