FXstreet.com (Barcelona) - According to the NAB Analyst Team, “The presence of an IMF program would be useful for the medium term sustainability of Spain and Italy’s financial position as well as their overall competitiveness.” However, there maybe some short term pain, given the recessionary conditions that affect both countries.
Moreover, Italian and Spanish authorities may resent the intrusion of external bodies such as the IMF and may be loathe to seek any assistance unless there is no other option. There are also issues surrounding the monitoring of such as program.
“There maybe a temptation by countries to issue shorter term debt (i.e. up to 3 years), thereby creating refinancing risks after 3 years.” the Team adds. Finally, there is the parlous state of the economies to contend with, and such a program will not directly benefit the ailing economies – notwithstanding the indirect benefits of mitigating against financial market disruptions.
Moreover, Italian and Spanish authorities may resent the intrusion of external bodies such as the IMF and may be loathe to seek any assistance unless there is no other option. There are also issues surrounding the monitoring of such as program.
“There maybe a temptation by countries to issue shorter term debt (i.e. up to 3 years), thereby creating refinancing risks after 3 years.” the Team adds. Finally, there is the parlous state of the economies to contend with, and such a program will not directly benefit the ailing economies – notwithstanding the indirect benefits of mitigating against financial market disruptions.
