The International Monetary Fund (IMF) is abandoning ship. An IMF memo dated July 15, 2015 describes the situation vis-a-vis the euro in Greece as unsustainable and lays out three possible scenarios, all of which include massive debt forgiveness, and all of which will make Germany and other European Union creditor countries blanch. (Read the memo here.) The bottom line: Greek debt will not be paid back in full. Obvious all along to many of us, perhaps, but here is the IMF finally admitting the cold, hard (and yes obvious) truth.
If you are not familiar with the history of the IMF, this a little like a prison warden saying, “whoa, whoa, whoa, let’s ease up on the punishment a little.” The organisation, along with the European Central Bank and the European Commission, has been responsible for subjecting Greece and other debtor nations to harsh austerity measures in return for loans and allowing them to stay on the euro common currency. In this way, the so-called troika of institutions has down the bidding of creditor countries, most prominent among them Germany and other Northern Europe nations.
Germany continues to take a hard line, and a recently passed last-ditch measure to “save” Greece simply kicks the can down the road (see previous post). The IMF now publicly agrees with this analysis, realising the more than $20 billion in loans to Greece is unlikely to be paid back in anything close to full. Greece is the IMF’s biggest debtor, but Portugal and Ireland also have huge outstanding debts to the organisation. (Portugal and Ireland are able to pay back these debts … for now.
What does is say about economic stability in Europe that these three European countries now account for almost two-thirds of the IMF’s outstanding debt when the institution has traditionally focused on poor, developing countries? It can’t be anything good. Rumors will persist about the ultimate ability of Spain, Portugal, Italy, and Ireland to remain with the euro. Meanwhile, Ukraine and other former Soviet satellite states are in economic turmoil due to Russian aggression and the British, having already refused to join the euro, will soon vote whether to leave the European Union altogether.
And the worst might be yet to come. For example, only 3% of British companies think a British departure from the European Union would be positive for business. Many think it would lead to a spiral of anti-free trade measures, tariffs, and regulations that would hurt international business companies and residents in EU countries.
For Europeans, this instability has wrought terrible results. For international business and international investment, the results have been the same. Individuals in Spain, for instance, are increasingly looking to offshore companies or offshore corporations for a safer home for their hard-earned money. A pensioner in Madrid, where my source for all financial matters in Spain meets many such people, can see the writing on the wall. He asks, “where is my money safe?” and begins to look overseas to offshore companies. Because he knows his money is no longer safe in Spain.
Belize offshore companies offer opportunities to both individuals and corporate entities. Individuals can open a Belize international business company (IBC) or Belize limited liability company (LLC) along with a Belize offshore bank account – legally, tax-exempt, and confidentially – in one day. The pensioner in Spain needs to look no further than the investor-friendly, open, legally-protected environment of Belize to protect his money. Other ways to shield assets are offshore foundations and offshore trusts, which also might make sense depending on specific circumstances. (See previous blog post for additional information.)
Overseas international businesses might consider opening a Belize international business company and offshore account for a number of additional reasons:
- Management of intellectual property
- Lack of foreign currency exchange controls (stock broker, forex, etc.)
- Custody of movable and immovable property
- Internet business/commerce
Whatever your reason, at Wrobel and Co., we can get you started today.
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