Home
Greek PM warns on bankruptcy as crunch looms
AFP
Greek PM Warns Other Euro Countries Play Video CNBC – Greek PM Warns Other Euro Countries
Greek PM warns on bankruptcy as crunch looms AFP/File – Greek Prime Minister George A. Papandreou speaks during a press conference on February 11 in Brussels. …
46 mins ago
ATHENS (AFP) – Greece risks bankruptcy unless strict austerity measures are enacted fast to cut its deficit, Prime Minister George Papandreou warned on Friday, while reports said the EU wants even more belt-tightening.
"The dilemma is -- are we going to let this country go bankrupt or are we going to react?" Papandreou told lawmakers in Athens.
"We have an obligation to the Greek people to do everything we can now, today, to face immediate dangers because tomorrow will be too late," he said.
Papandreou also emphasised that "no other country will pay our debts" amid speculation of possible emergency financing from the European Union.
His comments came after news reports said that Greece had to delay a bond issue this week because of financial market turbulence, as three major German banks told AFP they would no longer buy Greek government bonds.
Greece has the highest public deficit in the eurozone and its fiscal crisis has dragged down the value of the euro and raised fears on Europe's economy. Moody's rating agency has estimated that 15.1 percent of tax revenues will be needed to finance borrowing this year.
Analysts at Wall Street giant Goldman Sachs said in a note that Greece faced "imminent refinancing challenges" and possible "liquidity shortages."
Greece has raised about 14 billion euros (19 billion dollars) this year out of an estimated 55 billion euros in financing needs, the analysts said. It also has 20 billion euros in debt service payments due in April and May.
"Our view for some time now has been that the government will be hard-pressed to push through this financing hump with only commercial or internal sources of funding," the bank said.
"Some external assistance may therefore ultimately be required, likely in the form of bilateral aid or loan guarantees from individual member states."
Goldman Sachs is under scrutiny for allegedly assisting Greece to conceal the weak state of its finances from the early years of the eurozone.
Christoph Weil, an economist at Germany's Commerzbank in Frankfurt, said: "The focus is on the question whether Greece will find any buyers at all for the bonds it will have to issue to prevent default by April at the latest."
A Greek official meanwhile told AFP on condition of anonymity that the head of Deutsche Bank, Josef Ackermann, was in Athens on Friday and could meet with Papandreou, saying the talks would send "a message to the markets."
The prime minister said earlier that Greece's borrowing needs are covered only until mid-March and has called for the EU to intervene to lower the rate at which Greece can raise funds to a level comparable to its eurozone partners.
The yield, or interest rate, that Greece must pay in order to sell its debt on bond markets has risen sharply in recent months because of a perceived risk of default and is now more than twice as high as Germany's.
The yield on Greece's 10-year bonds, however, dipped to 6.605 percent on Friday afternoon from 6.640 percent late on Thursday -- still high compared to 3.113 percent for the equivalent German bonds.
Financial markets have become wary of Greek bonds since the country raised its 2009 public deficit estimate to 12.7 percent of output from 3.7 percent initially, highlighting disastrous finances and unreliable book-keeping.
The government has since unveiled a series of austerity measures including new taxes, public sector benefit cuts and hiring freezes to save in order to shave off four percentage points from the deficit this year.
But the European Union is now pressing for far tougher action in the Greek programme, Dow Jones Newswires reported, citing a senior Greek official.
"They are telling us the current measures will only cut two percentage points," the government official was quoted as saying on Friday.
Heightening investor fears, Moody's and Standard & Poor's have warned of possible further downgrades of Greece's already low credit rating.
Luxembourg Finance Minister Luc Frieden meanwhile said in an interview published on Friday that fellow eurozone states would have to step up to aid Greece if necessary in the interests of European cohesion.
"We don't have any other choice. Europe is a community of solidarity," Frieden told the German business daily Handelsblatt. "We are not going to allow Greece to become a risk for the eurozone," he said.
French Finance Minister Christine Lagarde also said in an Australian television interview that if Athens proved it could reduce its deficit "members of the eurozone clearly will be prepared to help Greece if that was necessary."
AFP
Greek PM Warns Other Euro Countries Play Video CNBC – Greek PM Warns Other Euro Countries
Greek PM warns on bankruptcy as crunch looms AFP/File – Greek Prime Minister George A. Papandreou speaks during a press conference on February 11 in Brussels. …
46 mins ago
ATHENS (AFP) – Greece risks bankruptcy unless strict austerity measures are enacted fast to cut its deficit, Prime Minister George Papandreou warned on Friday, while reports said the EU wants even more belt-tightening.
"The dilemma is -- are we going to let this country go bankrupt or are we going to react?" Papandreou told lawmakers in Athens.
"We have an obligation to the Greek people to do everything we can now, today, to face immediate dangers because tomorrow will be too late," he said.
Papandreou also emphasised that "no other country will pay our debts" amid speculation of possible emergency financing from the European Union.
His comments came after news reports said that Greece had to delay a bond issue this week because of financial market turbulence, as three major German banks told AFP they would no longer buy Greek government bonds.
Greece has the highest public deficit in the eurozone and its fiscal crisis has dragged down the value of the euro and raised fears on Europe's economy. Moody's rating agency has estimated that 15.1 percent of tax revenues will be needed to finance borrowing this year.
Analysts at Wall Street giant Goldman Sachs said in a note that Greece faced "imminent refinancing challenges" and possible "liquidity shortages."
Greece has raised about 14 billion euros (19 billion dollars) this year out of an estimated 55 billion euros in financing needs, the analysts said. It also has 20 billion euros in debt service payments due in April and May.
"Our view for some time now has been that the government will be hard-pressed to push through this financing hump with only commercial or internal sources of funding," the bank said.
"Some external assistance may therefore ultimately be required, likely in the form of bilateral aid or loan guarantees from individual member states."
Goldman Sachs is under scrutiny for allegedly assisting Greece to conceal the weak state of its finances from the early years of the eurozone.
Christoph Weil, an economist at Germany's Commerzbank in Frankfurt, said: "The focus is on the question whether Greece will find any buyers at all for the bonds it will have to issue to prevent default by April at the latest."
A Greek official meanwhile told AFP on condition of anonymity that the head of Deutsche Bank, Josef Ackermann, was in Athens on Friday and could meet with Papandreou, saying the talks would send "a message to the markets."
The prime minister said earlier that Greece's borrowing needs are covered only until mid-March and has called for the EU to intervene to lower the rate at which Greece can raise funds to a level comparable to its eurozone partners.
The yield, or interest rate, that Greece must pay in order to sell its debt on bond markets has risen sharply in recent months because of a perceived risk of default and is now more than twice as high as Germany's.
The yield on Greece's 10-year bonds, however, dipped to 6.605 percent on Friday afternoon from 6.640 percent late on Thursday -- still high compared to 3.113 percent for the equivalent German bonds.
Financial markets have become wary of Greek bonds since the country raised its 2009 public deficit estimate to 12.7 percent of output from 3.7 percent initially, highlighting disastrous finances and unreliable book-keeping.
The government has since unveiled a series of austerity measures including new taxes, public sector benefit cuts and hiring freezes to save in order to shave off four percentage points from the deficit this year.
But the European Union is now pressing for far tougher action in the Greek programme, Dow Jones Newswires reported, citing a senior Greek official.
"They are telling us the current measures will only cut two percentage points," the government official was quoted as saying on Friday.
Heightening investor fears, Moody's and Standard & Poor's have warned of possible further downgrades of Greece's already low credit rating.
Luxembourg Finance Minister Luc Frieden meanwhile said in an interview published on Friday that fellow eurozone states would have to step up to aid Greece if necessary in the interests of European cohesion.
"We don't have any other choice. Europe is a community of solidarity," Frieden told the German business daily Handelsblatt. "We are not going to allow Greece to become a risk for the eurozone," he said.
French Finance Minister Christine Lagarde also said in an Australian television interview that if Athens proved it could reduce its deficit "members of the eurozone clearly will be prepared to help Greece if that was necessary."
