Greece says debt negotiations concluded positively
A near month-long inspection of Greek finances by the European Union, European Central Bank and International Monetary Fund concluded «positively» on Friday, the country’s finance ministry said.
The inspection is crucial to whether Greece will receive the next batch of loans from a €110 billion bailout fund from the EU and IMF agreed last year and could well inform discussions over an extension to the current financial rescue package.
The prevailing view in the markets is that Greece, which is effectively locked out of raising money through the sale of its bonds because of prohibitively high interest rates, will need another bailout.
The negotiations with the debt inspectors, known collectively as the troika, dealt with both the steps Greece has been taking to reform its economy in line with last year’s package of loans, and a programme of additional measures for the years 2012-2015.
A privatisation programme that seeks to raise funds for the cash-strapped country, further measures to be taken this year to meet deficit reduction targets and structural reforms to the Greek economy were all discussed, the ministry said in a statement.
The Greek government is seeking to narrow its deficit to 7.5 percent of gross domestic product by the end of this year, from the 10.5 percent it stood at in 2010. To achieve that, Finance Minister Yiorgos Papakonstantinou last month announced remedial austerity measures worth about €6.4bn for this year.
The texts detailing the measures are to be finalised «in the coming days» and will be submitted to parliament after being approved by the cabinet, the ministry said.
The euro pushed up to day highs of $1.4585 after the statement, while anticipating the news, Greece’s borrowing costs eased during the day, with yields on 10-year Greek bonds dropping some 60 basis points to 16.2 percent. Shares on the Athens Stock Market closed up 4.4 percent at 1,333.66.
The troika was expected to issue its own announcement later Friday.
The ministry statement came as Prime Minister George Papandreou held emergency talks in Luxembourg with Jean-Claude Juncker, who heads the group of 17 eurozone finance ministers.
The original bailout plan, from which Greece began drawing funds in May last year, envisaged the country being able to tap bond investors in 2012, but with the interest rates on Greek bonds remaining exceptionally high, that appears increasingly unlikely.
Those funding gaps are likely to have to be filled by a second bailout being negotiated by other eurozone countries.
The austerity measures taken so far have led to frequent strikes and demonstrations.
The latest saw about 200 protesters from the communist party-backed Pame union take over the Finance Ministry building at dawn Friday They unfurled a giant banner from the roof calling for a general strike.
Other protests and demonstrations were planned for later Friday evening.
The new cutbacks are expected to be submitted to parliament in coming days, where the governing Socialists have a six-seat majority. But several Socialist backbenchers have voiced strong criticism, and the government this week canceled two planned briefings of its deputies to avoid a showdown.
Sixteen Socialist lawmakers have signed a letter calling for an extensive debate on the proposed new cutbacks before their ratification, with one of the signatories threatening on Friday not to vote for the reforms.
«If the draft legislation is brought to Parliament without prior discussion, I will not vote for it,» Thomas Robopoulos told state Net television.
Greece’s woes have been compounded by repeated downgrades of its credit ratings – Moody’s warned Wednesday that the country had a 50-50 chance of defaulting on its debts.
On Friday, Moody’s also cut the ratings of eight Greek banks – National Bank of Greece, Eurobank, Alpha, Piraeus, Agricultural Bank of Greece, Attica, Emporiki and General Bank of Greece. (AP)
COMMENT BY SOMEONE WHO ACTUALLY LIVES WITH THE OTHER HALF AND NOT IN THE FAIRYLAND POLITICIANS BELIEVE GREECE IS:
THE GOVERNMENT SAYS NEGOTIATIONS CONCLUDED POSITIVELY. WHAT THEY FORGOT TO TELL US IS FOR WHOM? NO ONE HAS SEEN GOVERNMENT OFFICIALS REDUCE MP EXPENSES AND WITH CELL PHONE BILLS REACHING €46,319 AS SEEN RECENTLY ON AN OFFICIAL REQUEST FORM TO COVER THESE EXPENSES SENT BY VICE-PRESIDENT THEODOROS PAGKALOS’S BUREAU, NO WONDER GREEKS HAVE FLOCKED TO CENTRAL SQUARES ALL OVER GREECE RECENTLY TO EXPRESS THEIR ANGER. THIS, OF COURSE, IS JUST ONE OF THE MANY SMALL INJUSTICES GREEKS FEEL NEEDS TO BE STRAIGHTENED INSTEAD OF SELLING OFF THEIR COUNTRY FOR A MERE PITTANCE TO SATISFY FOREIGN SPECULATORS, VENTURE CAPITALISTS AND LONE SHARKS.