A senior International Monetary Fund official warned of Japan's growing fiscal problems in an interview published Monday, describing the pace of deterioration as "pretty high".IMF Deputy Managing Director Naoyuki Shinohara made the comments in an interview with Kyodo news agency in Washington."Although Japan's problem should not be treated in the same way as the Greece debt crisis, its fiscal vulnerability is rising fairly high," he said.
Greece became the first country to defer a payment to the International Monetary Fund since the 1980s as its game of brinkmanship with creditors goes down to the wire.
With Prime Minister Alexis Tsipras getting ready to address parliament on Friday after receiving a list of creditors’ demands, the step underscores the state of the country’s shrivelling finances. While international officials have reported some progress in recent days, German Chancellor Angela Merkel said “we’re still far from reaching a conclusion.”
A central bank official, according to The FT, said that Greece has repaid the €450m it owed the International Monetary Fund today. Bond yields have fallen across the Greek curve with 10Y GGBs now at 11.1% (down 70bps from Tuesday's highs). Greek stocks are not as impressed and are giving back their gains.
The economic news coming out of Japan is not heartening.
The world’s third-largest economy has entered a technical recession after contracting for two straight quarters, revised official data showed last month.
Analysts believe economic conditions probably worsened in the current quarter due to collapsing exports to China and the European Union, falling domestic auto sales and decelerating post-tsunami reconstruction spending.
But the negative news doesn’t end there.
The International Monetary Fund has hinted Greece could be forced out of the eurozone, as the country edges closer to judgment day with its foreign creditors.
IMF chief Christine Lagarde admitted she could not “preclude” a “potential” Greek exit, after four months of tortuous bail-out talks that have failed to get both sides closer to a deal to release aid to the country.
IMF global growth forecasts have been totally hopeless, with one downgrade after another.The latest forecast takes the cake for ridiculousness, not only because of the direction, but also because of the rationale.Please consider IMF Cuts Global Economic Growth Forecasts.
One way or another the crisis in Greece is highly likely to come to a head in June.Greek finances are in such sorry shape it needs a third bailout or it will be unable to meet payment obligations in August. And unless an agreement in June is reached to unleash more funds, Greece will not make it to August.