Moody’s says deal delay is ‘credit negative’

4 May 2016
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Moody’s has described the delays in the completion of the first review of Greece’s third bailout agreement as “credit negative,” estimating that the talks could go on until July.

The US ratings agency also warned that the delay increases the risk of a new liquidity crisis in the Greek economy, while working against any discussion regarding the lightening of the Greek debt, hurting confidence further.

Moody’s argued that the main obstacles to reaching an agreement concern the requirements of the International Monetary Fund regarding the national debt and lower primary surplus targets, and the differences between Athens and its creditors concerning the social security system, changes in taxation and the new privatizations fund.

The analysis stressed that Greece requires 7.5 billion euros to cover its obligations to the European Central Bank (5 billion) and IMF (2.5 billion) in June and July. It further warned that political uncertainty is on the rise as the SYRIZA-Independent Greeks coalition only has a parliamentary majority of three deputies and may run into difficulties during the voting on the social security reform and the tax system.

Moody’s also makes reference to the lead that opposition New Democracy has in opinion polls, adding that it may try to force a general election.

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