International "Extend-and-Pretend" - Greece Needs IMF Extension

The highly popular game of extend-and-pretend took another step forward in the international arena today as noted by Greek loan repayment extension on the table

Greece's prime minister said in an interview that the possibility of extending repayment of its EU/IMF loan was on the table, but an ECB policymaker said any talk of renegotiation could harm the country's credibility.

Greece has cut public wages and pensions and raised taxes to help plug its budget shortfall as part of a 110 billion euro EU/IMF bailout that saved it from bankruptcy in May.

But officials say it will miss this year's deficit target because of a revision of 2009 fiscal data and weak revenue growth, and the government has said it is ready to make extra spending cuts if necessary.

"The issue of extending the repayment of the support mechanism loan has already been put on the table," Prime Minister George Papandreou said in an interview to be published by the Greek newspaper Proto Thema on Sunday.

Analysts have said Greece is likely to need additional help eventually because of a jump in 2014/2015 gross borrowing needs when the 3-year bailout deal expires.

The International Monetary Fund has also said extending repayments is an option, but last month Germany strongly opposed it and the European Commission said no talks were taking place.

If 2014-2015 is not the target date, pray tell what is?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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