Forex Flash: Risks of the Eurogroup deal along the way – Merrill Lynch

FXstreet.com (Barcelona) - Merrill Lynch analysts point to the risks to the current Eurogroup plan to tackle the debt crisis. First, the recent deal made for Greece will most likely need parliamentary approvals, at least in Germany and Finland, in the next few days. "Most likely the German parliament will approve it, but this is a risk to keep in mind. The deal could still be finalized without participation from Finland -abstention of some countries has happened in the past", they wrote, adding that Portugal and Ireland could ask for a similar deal on the EFSF loans (no bilateral loans there), which may represent a political risk. "Interest deferral and lengthening of EFSF loans for these two countries would only increase the contingent liabilities for non-program countries in the long term, but may be difficult to engineer without a rise in funding costs for the EFSF", they added.

Merril Lynch analysts also point to Greece's obligation to meet the short-term conditions (MoU milestones) to get the remaining three sub-tranches in Q1 (¬9.3bn), but they believe it will be delivered, as the country has managed to already do a lot during this review.

The long term risk is the "ifs" surrounding the implementation of the measures in Greece, the economic recovery as projected in the program, and the promise of a Greek debt write-off if everything works.