Tagged: EU+IMF aid
Greece receives first tranche of EU bail-out loan
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.
German parliament to vote on Greece bail-out funding
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
HIGHLIGHTS – Greek finmin details EU/IMF aid deal
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:
DEAL
"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."
Merkel Vows Faster Greek Aid as Spain Shows Contagion
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
Fears of Greek debt default hit markets
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.
ECB’s Papademos: Greek aid must tackle core weaknesses
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
Greece to activate EU-IMF loans
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.
‘Pressure on’
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.
‘Safe harbour’
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
Greece debt: Government borrowing costs hit fresh high
BBC News | Wednesday, 21 April 2010 | 15:35 GMT
The Greek government’s cost of borrowing has hit a new high as talks on a joint eurozone and International Monetary Fund (IMF) rescue plan begin. The interest rate on 10-year government bonds hit 8.3% – the highest since the euro was introduced. Rates rose as it became clear that talks over the aid package may not be finished until days before a multi-billion-euro loan is due for repayment. Investors are becoming more convinced that Greece will need to be rescued. Greece’s finance ministry said the talks with the European Commission and the IMF would take about two weeks, with a joint text issued on about 15 May. On 19 May, Greece is due to repay investors an 8.5bn euros (£7.3bn) bond.
The talks cover austerity measures that Greece must take during the next three years to reduce its 300bn-euro debt mountain. If all sides can agree the measures, it should help clear the way for a quick payout of up to 40bn euros on offer from eurozone members and the IMF. In a statement on Tuesday, Greece’s finance ministry said: "The discussions concern a three-year programme of economic policies… which can be supported with financial assistance from eurozone members and the International Monetary Fund should Greek authorities decide to request the activation of the mechanism."
Greek Bonds Show EU Aid May Be Tapped as Yields Rise
Bloomberg | April 15, 2010 | 05:20 EDT
Greek bonds show the nation may have to tap a 45 billion-euro ($61 billion) international bailout to convince investors it can avoid a default. The 10-year securities fell for a third day today, and the yield premium investors demand to hold them instead of benchmark German bunds rose above 400 basis points for the first time since euro-region finance ministers announced the aid plan last weekend. The parliaments of Germany, France and Ireland must vote on whether to contribute their share of the loans, government spokesmen said yesterday. Dutch lawmakers will discuss Greek aid today. “There are concerns that the money will not be available,” said Toby Nangle, who helps oversee 46 billion euros as director of asset-allocation research at Baring Investment Services Ltd. in London. “There are people who are willing to place their own money at risk in anticipation of this thing not going through.”
Finance ministers said on April 11 the EU will provide Greece with 30 billion euros of three-year loans at an interest rate of about 5 percent if the nation requests the cash. The International Monetary Fund would provide another 15 billion euros. The agreement came after earlier pledges failed to convince investors that the government is able to narrow a budget deficit that is more than four times the EU’s limit for members.
Pimco Not Ready
Pacific Investment Management Co., which owns the world’s largest bond fund, said this week it’s not yet ready to buy Greek bonds. BlackRock Inc., the world’s biggest asset manager, said that donor countries need to demonstrate they can withstand a backlash from their citizens. “I don’t think Greece would go as far as waiting to be seen as failing in the market,” Christopher Pryce, a director at Fitch Ratings in London, said
EU approves bailout loans for Greece, if needed
CNN | March 26, 2010 | 7:32 pm EDT
German Chancellor Angela Merkel has described the agreement to secure an economic bailout plan for Greece as important for the stability of Europe’s common currency. "I think Europe proved its capacity for action on a major issue," Merkel told a news conference Friday, in quotes carried by Agence France-Presse. "For all of us it is important that our common currency… remains stable and that’s why yesterday was important for the euro." Greek Prime Minister George Papandreou said It was "an important decision we took today," according to CNN affiliate ERT. "It guarantees the protection of financial stability in the euro zone." The rescue plan, approved by all 16 leaders of the euro zone countries meeting at a summit in Brussels on Thursday, involves funds from both Europe and the International Monetary Fund. EU leaders had been reluctant to accept outside help for one of their own.
According to a joint statement on the EU Web site, a "majority" of the euro zone States would contribute an amount based on their Gross Domestic Product (GDP) and population, "in the event that Greece needed support after failing to access funds in the financial markets." This means that Germany will be the main contributor, followed by France. Although no specific figure was given for the total value of the package, a senior European Commission source was quoted by Reuters.com as saying it would be worth around $26.8 billion. Lorenzo Bini Smaghi of the European Central Bank told CNN that the plan was not the ideal solution but "politically it’s what has been decided and we have to make it work." He added that it was vital the situation was not repeated in future.
Greeks see no quick fix from EU safety net
Reuters Fri Mar 26, 2010 4:23pm IST
The safety net thrown to Greece is no panacea and prospects of an IMF bailout still loom, local experts believe, but Greeks hope the promise of EU support will afford them breathing space to revive their crippled economy. Euro zone leaders on Thursday agreed to create a backup mechanism jointly with the International Monetary Fund for debt-ridden member states such as Greece, but tough terms imposed by Germany mean it will only be activated as a last resort. European Central Bank Governor Jean-Claude Trichet meanwhile offered Athens more tangible help by extending easier ECB rules on accepting assets in liquidity operations into 2011, significantly reducing the risk of Greek bonds being rejected as collateral.
Trichet stole the local limelight on Friday, with newspapers and economists heaping praise on what they called a vote of confidence in Greek debt that could prove more significant than reassuring but intangible EU and IMF aid. "A double sigh of relief after an all-day thriller at Brussels," was the assessment of the centre-left Ta Nea newspaper. "Support from the EU and the IMF and a golden gift from Trichet." Economists said the move was good news for Greek banks and would also make it easier to persuade investors to buy its bonds — crucial given that it need to raise 16 billion euros, equating to more than 6 percent of the country’s entire economic output, between now and the end of May alone. "The (euro zone) agreement was positive but
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