The euro area approved its share of a 12 billion-euro ($17.4 billion) aid payment for Greece and pledged to complete work in the coming weeks on a second rescue package for the cash-strapped nation to prevent a default.
Finance ministers agreed to disburse 8.7 billion euros of loans under last year’s 110 billion-euro bailout by July 15, rewarding Greek PremierGeorge Papandreou for pushing an extra austerity plan through parliament. The International Monetary Fund is due to provide the rest of the July aid installment, the fifth under the 2010 package.
The spotlight now turns to a second bailout to which banks and insurers plan to contribute following German demands for taxpayer relief. Euro-area governments and investors will provide 70 percent of new aid that may total as much as 85 billion euros, with the IMF offering the rest, Thomas Wieser, an Austrian Finance Ministry official, said on June 30.
“The Greek authorities provided a strong commitment to adhere to the agreed fiscal adjustment path,” the 17 euro-area finance chiefs said in an e-mailed statement last yesterday after a conference call that was joined by the IMF’s acting chief, John Lipsky, and European Central Bank President Jean- Claude Trichet. “The precise modalities and scale of private- sector involvement and additional funding from official sources will be determined in the coming weeks.”
Papandreou’s Victory
Bonds of Europe’s most indebted nations rebounded this past week after Papandreou’s victory in parliament eased concerns about an imminent Greek default. Stocks and the euro rose. Greece’s bonds advanced for a second week and Italian 10-year securities gained for the first week in three, while the Spanish 10-year yield declined the most in five months. The two-year Greek yield dropped more than 150 basis points.
The euro rose 2.4 percent against the dollar, its first weekly gain in four weeks, and the StoxxEurope 600 Index snapped a string of eight straight weeks of losses. The MSCI World Index posted its biggest weekly advance in almost two years.
Europe is trying to draw a line under a debt crisis that Greece sparked more than a year ago and that threatens the 12- year-old monetary union. Ireland and Portugal sought emergency aid totaling 146 billion euros after the initial bailout of Greece in May 2010 and investors remain concerned about the vulnerability of some bigger euro nations including Spain.
Greek Lawmakers
The political mood in Europe has complicated the task, with a German-led group of richer nations reluctant to offer more aid and opposition to austerity mounting in Greece. Papandreou shuffled his cabinet last month to fend off a rebellion by his Socialist party and faced demonstrations and strikes this past week as Greek lawmakers approved a 78 billion-euro package of tax increases and asset sales.
Greek Finance Minister Evangelos Venizelos said the decision by his euro-area counterparts to release the fifth loan payment bolstered the country’s international credibility.
“What is now critical is the prompt and effective implementation of the decisions of parliament,” Venizelos said in an e-mailed statement from the Athens-based Finance Ministry.
The IMF signaled a readiness to approve its 3.3 billion- euro share of the next aid installment for Greece. “We look forward to continue working with the Greek authorities and the European partners in support of the economic program that will contribute to restoring fiscal sustainability,” the Washington- based fund said in an e-mailed statement.
‘Standstill’
The European Union and the IMF prodded Papandreou into action with a June report that said Greek economic-policy changes to which aid is tied had come to a “standstill.” The lack of progress helped derail the country’s plan to return to bond markets next year and prompted work on a second aid package.
In May, the EU warned that Greece had slipped off its course to narrow its budget deficit to 7.4 percent of gross domestic product this year from 10.5 percent of GDP in 2010, saying this year’s shortfall would be 9.5 percent. The nation’s debt will rise to 158 percent of GDP this year from 143 percent in 2010, according to EU forecasts.
As Papandreou’s legislative victory in parliament eased concerns about a Greek default, European governments reported progress in talks with investors over their contribution to a new aid package through a rollover of Greek debt.
Biggest Holders
“Consultations with Greece’s creditors are under way in order to define the modalities for voluntary private-sector involvement with a view to achieving a substantial reduction in Greece’s year-by-year financing needs, while avoiding selective default,” the euro-area finance chiefs said in their statement. The so-called eurogroup, led by Luxembourg’s Jean-Claude Juncker, is due to meet next on July 11 in Brussels.
German and French banks, the biggest holders of Greek debt, stepped up discussions on a rollover that officials say should amount to as much as 30 billion euros. Deutsche Bank AG Chief Executive Officer Josef Ackermann predicted on June 29 that financial companies would contribute to help avert a “meltdown.”
Under a French proposal, bondholders would agree to roll over 70 percent of their debt maturing through mid-2014 into new 30-year Greek bonds with the principal on the new debt guaranteed through Greece investing in zero-coupon bonds of similar maturity. Under a second option, investors would roll over 90 percent of their debt into new five-year bonds with no guarantee.
ECB Governing Council member Christian Noyer said the French proposal is “very good” and may make Greece’s rescue program more credible. It is in the interest of all the financial institutions who could participate in a Greek support plan, Noyer told Athens-based newspaper Proto Thema in an interview due to be published today.
To contact the reporters on this story: Jonathan Stearns in Brussels atjstearns2@bloomberg.net; James G. Neuger in Brussels at jneuger@bloomberg.net.
To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net
댓글 없음:
댓글 쓰기