IMF relaxes debt-cutting target for Greece
IMF relaxes debt-cutting target for Greece
But other sources involved in talks between euro zone finance ministers and the IMF cautioned that the funding gap was far bigger than suggested by Greece, and the two sides were not on the verge of striking a deal to solve the euro zone's most intractable problem, they said.
Finance Minister Yannis Stournaras signaled a compromise was near by saying the IMF had agreed to declare Greece's debt viable if it is projected to fall to 124 percent of GDP in 2020, giving ground on its earlier target of 120 percent.
The Eurogroup of euro zone finance ministers has already agreed on measures to reduce Greek debt to 130 percent of GDP in 2020, Stournaras said. "That leaves a gap of 5-6 percentage points of GDP to be covered — about 10 billion euros," he told reporters in Brussels.
The EU and IMF are considering bringing the debt down through a combination of interest rate cuts and extension of maturities on the country's loans, plus a debt buyback and a plan under which the European Central Bank would forego profits on its Greek bond holdings, a Greek Finance Ministry official told Reuters.
Teetering on the verge of bankruptcy, Greece is increasingly frustrated that its lenders are still squabbling over a deal to unlock fresh aid even though the government has pushed through unpopular austerity cuts that brought thousands on to the streets.
Athens says time is running out and that it needs its next installments of almost 44 billion euros in aid to recapitalize banks and stabilize its economy. Its next big debt repayment falls due in mid-December.
It expects the aid to be paid out in one installment, the government spokesman told Greek radio, playing down recent speculation that it could dribble out in bits.
The euro hit a three-week high against the dollar on growing optimism that Greece's lenders were close to an agreement.
Euro zone finance ministers, the IMF and ECB failed earlier this week to agree how to get Greek debt down to an manageable level and will have a third go at resolving the issue on Monday.
"I am expecting a result," Finnish Finance Minister Jutta Urpilainen told reporters when asked if a deal would be struck at Monday's meeting. "There are different alternatives being discussed all the time. I do believe that next Monday we can reach a sustainable and credible result."
A senior source involved in the negotiations confirmed that the IMF would now accept 124 percent as a target but was dismissive of the gap amounting to only 10 billion euros.
"There are still things missing to an agreement," the source said. "The 10 billion is too optimistic."
A Greek Finance Ministry official said the ECB could relinquish 9 billion euros of profits on the Greek bonds it holds, as part of the measures to bring debt in 2020 down from a previous estimate of 144 percent of GDP.
Other options include saving 8 billion euros from cutting the interest rate, extending maturities on Greek debt and spending 10 billion euros to buy back around 30 billion euros in debt at a deep discount.
Greece has already begun preparations for the buyback, which could be completed by the end of the year if euro zone finance ministers approve the move, the official said.
According to current government projections, Greek debt is seen at 340.6 billion euros, or 175.6 percent of GDP at the end of 2012. It is expected to peak at 357.7 billion euros, almost 191 percent, in 2015.
According to a document circulated at the Eurogroup meeting, Greece's debt cannot be cut to 120 percent of GDP by 2020 unless euro zone member states write off a portion of their loans to Greece, which Germany has said would be illegal.
The document prepared for the meeting of euro zone finance ministers and seen by Reuters spelled out several options now cited by Greek officials - including using about 10 billion euros to buy back bonds at between 30 and 35 cents in the euro.
Many Greek retail bondholders are still angry about a debt restructuring earlier this year that imposed heavy losses on private holders of Greek debt.
About 40 retail bondholders pushed past security at the ruling conservative New Democracy party's offices in Athens yesterday, pelted a portrait of party founder Constantinos Karamanlis with eggs and scuffled with guards.
Saudi insurance stocks soar as female drivers take to the road
LONDON: Saudi insurance stocks surged on Sunday, with investors expecting the sector to reap significant dividends following the lifting of the ban on female drivers.
Insurance stocks — one of the worst performing sectors on the Saudi bourse for the year to date — outperformed other classifications on Sunday, ending 2.4 percent higher, compared with a 1.8 percent rise for the Kingdom’s headline index.
Amana Insurance and AlRajhi Takaful were the best performers of the day, gaining 9.9 percent each. Tawuniya, the Kingdom’s largest insurer, ended Sunday 1.1 percent higher, with only one of the country’s 33 listed insurance providers closing lower for the day.
The lifting of restrictions on female drivers — which came into effect on Sunday after first being announced in September — is part of a series of wide-ranging reforms introduced as part of Saudi Arabia’s Vision 2030 economic transformation program, designed to diversify the economy away from a reliance on oil revenues.
The advent of women drivers is forecast to benefit the economy by significantly increase female participation in the workforce, and stimulating financial, insurance and retail sectors among others.
The insurance sector is set to draw particular benefit from the move, but may remain under pressure, according to rating agency S&P.
“We anticipate that efforts of the local authorities to tackle the large number of uninsured drivers, combined with the arrival of women drivers … and the introduction of additional benefits under the unified medical policy from July 1, will support further premium growth in the industry in the medium term,” said S&P in a research note in April.
“However, these factors may be offset by the large number of foreign workers that have already left or will be leaving the Kingdom in 2018.”
In spite of yesterday’s price surge, insurance stocks are 8.4 percent lower for the year to date. Tadawul as a whole is up 15.6 percent so far this year, making the bourse one of the world’s best performers for 2018.
Investor sentiment on Sunday was also boosted by investor optimism after index provider MSCI announced last week that it would upgrade Saudi stocks to its Emerging Markets Index from next year.
The widely anticipated upgrade — which puts Saudi equities on an index tracked by around $2 trillion worth of global assets — is expected to attract up to $40 billion of international funds, Tadawul CEO Khalid Al-Hussan told Arab News last week.
MSCI’s upgrade came after a similar move by fellow index provider FTSE Russell in February, which is also scheduled to come into effect from next year.
Banks were among the other bright performers on Tadawul on Sunday. Arab National Bank led gains, closing up 4.2 percent, while blue-chip names NCB and AlRajhi rose 1.6 percent and 2.3 percent respectively.
Some petrochemical companies also added value, Reuters reported, following a rise in oil prices after OPEC decided on only modest increases in crude production last week.
Outside Saudi Arabia, Gulf markets posted minor gains. In Dubai, where the index was flat, Air Arabia was unchanged. Shares in the airline have declined by more than 10 percent since early last week, when the company said it had hired experts to protect its business interests in private equity firm Abraaj, which has filed for provisional liquidation. The airline said its exposure was around $336 million.
Last week, the UAE’s securities regulator asked listed companies to declare their exposure to Abraaj.