On Cyprus, Inner City Press Asks IMF of PIMCO - BlackRock Spat, IMF Emphasizes That "BlackRock Was Not Chosen"

By Matthew Russell Lee

UNITED NATIONS, July 30 -- When the International Monetary Fund took questions about Cyprus on an embargoed media call about its concluding statement for the 2014 Article IV Consultation and its fifth review of Cyprus’s economic program on July 30, most were about foreclosures.

The IMF's Mission Chief for Cyprus Delia Velculescu said several times that the next tranche of the bailout is unlikely in September if a law speeding foreclosures is not enacted by then, despite nearly across the board opposition from political parties.

For example, deputy spokesman Athos Antoniades said. “The Democratic Party will not vote on such a sensitive issue with a gun to its head.”

But that is the situation: no law, no money.

Inner City Press asked Velculescu about the discrepancies between PIMCO's estimate of what Cyprus' banks needed, and the lower BlackRock estimate that has recently come to light.

Velculescu replied that “at the time of the on-set of the program the requirement was for an independent assess of capital needs in the banking sector.” She said, “Countries have decided of course on individual independent assessors... PIMCO was chosen in Cyrus.”

Backing up PIMCO and the resulting capitalization framework (and “bail-in”), Velculescu said, “we believe the assessment was done independently... with methodology that were specific to the company that undertook it.”

Inner City Press asked, “So BlackRock was wrong?”

Velculescu replied, “BlackRock was not chosen for the assessment that was undertaken in Cyprus.. the recapitalization was done under PIMCO.. BlackRock was the assessor in another country.”

So is this a case of two financial firms snarking at each other, on a competitive basis, or as PIMCO acting for those who wanted to justify the bail-in and the “gun to the head” that has come afterwards? We'll have more on this.

Amid Layoffs in Greece & Deposit Loss in Cyprus, IMF Upbeat, Jeremic's UNGA to Rate the Credit Rating Agencies, Inner City Press Learns

By Matthew Russell Lee

UNITED NATIONS, July 31 -- In the aftermath of International Monetary Fund policies in Greece and Cyprus, the IMF on Wednesday morning pumped out relentless if unrealistic good news.

  Greece is moving to lay off 4000 civil servants this year and 15,000 by the end of 2014. Cyprus has decreed 47/5% losses on some bank accounts; Cypriot finance minister Haris Georgiades said thus "the banking sector is on its way to being stabilized" and "the country remains committed to meeting all bailout targets."

  On the IMF's Cyprus press call, 7 am Eastern time in the US, mission chief Delia Velculescu was asked, if the country's program next goes to the IMF Executive Board September 20 with her report finalized earlier in the month, how will it take into account new data?

  The question arises in the context of the IMF admitting the the "multiplier" of effects it used in Greece was inaccurate. Velculescu quickly said all will go well -- then promised a transcript of the the call, but only tomorrow or even Friday. Some sense of urgency.

  Of the Greek layoffs, an IMF report made public 8 am today says, Public administration reform has lagged far behind and the authorities are beginning to address delays... progress in completing staffing plans and placing public sector employees in the mobility scheme has been very slow."

  At the UN, Inner City Press has learned, outgoing President of the General Assembly Vuk Jeremic of Serbia intends to hold his final debate on a topic that is or should be relevant to the IMF: the credit rating agencies. 

  What has been done to reform them, after their shameful role in the subprime meltdown? It's the General Assembly that will be debating this. Watch this site.