BBC NEWS | 2010/05/18 | 08:51:09 GMT
Greece has received the first tranche of an 110bn-euro ($136bn; £94bn) loan to help it overcome its debt crisis, the European Union has said. The European Commission said 20bn euros from the EU and the International Monetary Fund had been drawn on. The bail-out package for Greece – which has an 8.1bn-euro bond repayment due on Wednesday – was agreed earlier in May.
On Monday, eurozone finance ministers insisted the euro was still credible despite its slide against the dollar. The European single currency fell to its lowest level against the dollar since 2006, amid concerns that debt problems will undermine Europe’s recovery. On Tuesday it recovered some ground but remained under pressure, trading at $1.2335. It was broadly unchanged against sterling with one pound buying 1.165 euros.
BBC NEWS | 2010/05/07 | 07:20:15 GMT
Germany’s parliament is to decide on whether to approve a multi-billion euro bail-out plan for debt-ridden Greece. The lower house, the Bundestag, is set to debate the legislation for two hours before voting. The upper house, the Bundesrat, will vote afterwards. Assuming both houses back the bill, as expected, President Horst Koehler will then sign it into law. Concerns about Greece’s economic crisis have spread fear of contagion in global markets, prompting an Asian slump. Japan’s Nikkei index shed 3.2% while Australia’s main index lost 1.6%, amid investor fears that Greece’s debt crisis could halt the global economic recovery. Those losses followed heavy falls on US markets, where the Dow Jones index slumped 9% at one point before bouncing back to end Thursday down 3.2%.
The BBC’s Caroline Hepker in New York says there are rumours that the drop may have been caused by an erroneous "fat finger" trade at a Wall Street bank. London and France’s benchmark indexes opened sharply lower on Friday. The pound also fell sharply against the dollar and the euro as results poured in from the UK general election, falling three cents, or 2%, against the dollar, to $1.4639. With the majority of results counted, projections showed that no party was on course for an overall majority, raising concerns that a weak government might not be able to implement policies quickly to reduce the UK’s high budget deficit.
Unable to act?
On Thursday, Greek MPs approved drastic spending cuts in exchange for an international financial rescue plan, amid violent protests in Athens. German Chancellor Angela Merkel has defended her country’s plan to provide 22.4bn euros ($28.6bn) in aid to Greece, saying the EU is at stake. She has warned that if the 27 member
Reuters | Sun May 2, 2010 | 3:58pm IST
The choice was rescue or collapse, Greek Finance Minister George Papaconstantinou said on Sunday after the debt-choked country clinched a multi-billion euro aid deal with the EU and the IMF.
Here are highlights from his comments during a news conference:
"The cabinet decided to accept the programme it negotiated with the ECB, EU and the IMF… the decision on the size of the aid will be announced today after the Eurogroup meeting."
RESCUE OR COLLAPSE
"We are all being called to make a choice. The choice is collapse or salvation. The choice is between fleshing out a very ambitious and difficult 3-year programme of fiscal consolidation, a programme of structural reforms … or the country to reach an absolute dead-end."
PROTECTED FROM MARKET EXPOSURE
"Thanks to the aid the country will be protected from market exposure for the rest of 2010, 2011 and 2012."
Bloomberg | April 28, 2010 | 13:12 EDT
German Chancellor Angela Merkel and the International Monetary Fund pledged to step up efforts to overcome the Greek fiscal crisis as Standard & Poor’s downgraded Spain and investors sold bonds in Europe’s most indebted nations. “It’s completely clear that the negotiations between the Greek government, the European Commission and the IMF need to be sped up now,” Merkel said in Berlin today. Flanked by IMF Managing Director Dominique Strauss-Kahn, she said the “stability of the euro zone” was at stake if a 45 billion-euro ($59 billion) loan package for Greece can’t be delivered fast. A failure by policy makers to match such talk with action has fanned concern that the crisis will spread beyond Greece. Merkel has delayed German approval of loans in the face of voters’ opposition and S&P today cut Spain’s credit rating, a day after it dropped Greece to junk status and downgraded Portugal. The euro fell to the lowest in a year. “The hesitant and haphazard reaction of euro-zone policymakers to Greece’s predicament underscores the dangers of contagion,” said Marco Annunziata, chief economist at UniCredit Group in London. “The euro-zone has taken over six months to react and is allowing uncertainty to persist. This does not bode well for their ability to react quickly should a second flashpoint burst.”
Need for Action
Speaking in Berlin, European Central Bank President Jean- Claude Trichet said the stability of the “euro zone is impacted” by the delays in delivering the Greek aid, “underscoring the need for action.” Strauss-Kahn told reporters that “every day that is lost is a day where a situation is getting worse and worse.” European stocks and bonds rallied earlier after a German lawmaker stoked speculation that Greece would get as much as 120 billion euros from the EU and the IMF, only for the Spanish downgrade to dash that optimism. The euro dropped 0.2 percent to $1.3143 and Spain’s IBEX 35 Index plunged 3 percent to 10,167 points, the lowest in two months. The yields on Spanish, Greek, Portuguese and Italian 10- year bonds rose. Spain had its credit rating cut one
Reuters | Wed Apr 28, 2010 | 2:57pm IST
Fears that a planned rescue of Greece could stall and extend the financial crisis to other euro zone countries hit European markets on Wednesday as investors worried that Athens may default on its debt. A day after rating agency Standard and Poor’s slashed Greek debt to junk status, the premium investors demand to hold Greek government bonds jumped to its highest in 14 years. S&P also downgraded Portugal, raising concerns the crisis may spread to other indebted states on the eurozone fringes. European shares hit a five-week low in early trade, after recording their biggest one-day fall in five months on Tuesday. "The chances of a default by the Greek government are increasing not by the day but by the hour. If the IMF and European governments don’t come up with something quickly, then I see the market going down further quite rapidly," said Koen De Leus, economist at KBC Securities.
European Central Bank Executive Board member Juergen Stark said governments must ensure the financial market troubles do not develop into a full blown sovereign debt crisis. "The current trend in fiscal policies is simply not sustainable. … The onus is now on governments to ensure that the crisis that initially affected the financial sector, and subsequently the real economy, does not lead to a full-blown sovereign debt crisis," Stark said. "Averting it will require very ambitious and credible fiscal consolidation efforts. In fact, substantially stronger consolidation efforts than those conceived so far." European Union President Herman Van Rompuy said he would convene a summit of euro zone countries around May 10 and insisted there would be no restructuring of Greek debt. "Negotiations are going on, they are well on track, and no question about restructuring of the debt," he told a news conference in Tokyo.
Reuters | Tue Apr 27, 2010 | 3:16pm IST
The aid package for Greece must tackle the root causes of the country’s economic weaknesses, European Central Bank Vice-President Lucas Papademos said on Tuesday. Papademos, a former head of the Bank of Greece, said financial market pressures on Greece had intensified despite the country’s promises to clean up its public finances and support for the reforms from European Union policymakers. Greece asked for emergency aid on Friday and is currently in talks with the European Union, the International Monetary Fund and the ECB on the terms of the deal.
"It is essential that the economic programme currently being prepared by the European Commission, the ECB and the IMF together with the Greek authorities specifies comprehensive fiscal measures and structural reforms that will address the root causes of Greece’s fiscal imbalances and structural weaknesses so as to ensure the sustainability of its public finances and improve the country’s international competitiveness," Papademos told a European parliament committee. He urged all euro zone countries to stick to EU budget rules, warning that fiscal imbalances were not expected to see a discernible improvement until 2011-2012. He also warned that some fiscal repair plans did not have enough detail or were based on over-optimistic assumptions.
"In several stability programmes, the fiscal strategies presented are not underpinned by adequately specified measures, in particular for the latter years of the projection horizon. Moreover, in a number of cases, the stability programmes are based on optimistic macroeconomic assumptions that put the
BBC News | Friday, 23 April 2010 | 11:33 GMT
Greek Prime Minister George Papandreou has asked for activation of an EU-IMF debt rescue mechanism, to help pull the economy out of its current crisis. It follows negotiations with eurozone nations and International Monetary Fund over the details of an emergency rescue package. It comes a day after data showed a worse-than-expected budget deficit of 13.6% of gross domestic product. Credit rating agency Moody’s also cut its rating on Greek debt on Thursday.
The BBC economics editor Stephanie Flanders said that during the Greek crisis eurozone finance ministers had been hoping that the promise of support would be enough to reassure investors. But that had not been the case, and our correspondent said the pressure was now on to come up with the fine detail of a deal very quickly. She said that, with very tight economic conditions already in place in Greece, any IMF conditions attached to loans would likely be of an economic nature, such as interest rates, rather than calls for more stringent cost-cutting measures. "Even if Greece, with this money does get through [the crisis], it is still going to hurt for sure," she added.
Mr Papandreou is visiting the Aegean island of Kastellorizo where he made a statement to Greek television. He said the markets had not responded positively to Greece’s austerity measures. That meant it was now a "national and pressing necessity" to access the EU-IMF aid, and that he had asked Finance Minister George