The finance chief for the 16 euro countries, Luxembourg premier Jean-Claude Juncker, said on Tuesday he was "reassured" by market reaction to a 30-billion-euro backstop Greek bailout. "We took the right decision on Sunday ... I am reassured by the reactions of markets since," Juncker told AFP in Luxembourg, referring to a firming of the euro against the dollar on Monday and a fall well below 7.0 percent for the interest rates Greece must pay to borrow on commercial markets.
Juncker, whose Eurogroup of finance ministers will meet in Spain on Friday to assess political progress on activating the plan if sought by debt-stricken Athens, also said he was pleased that a Greek government auction of short-term loan notes on Tuesday had been "oversubscribed at acceptable rates."
Dangling a return of over more than 4.0 percent, Athens raised 1.56 billion euros (2.12 billion dollars) from six-month and one-year treasury bills compared to an initial target of 1.2 billion euros. Nevertheless, Juncker said Europe would have to "wait several days" to reach a "definitive" judgement on how the plan, which would involve another 15 billion euros in loans this year from the International Monetary Fund subject to ongoing negotiations, had been received "in its entirety."
"I am not going to speculate as to an eventual Greek decision to ask for funds," he said. "I still hope - I am practically convinced - that Greece, given the healthy reception on markets, will not be faced with financing difficulties in the immediate period ahead," he stressed. Tuesday's loan drive, fresh from eurozone action designed to calm fears of a default, resulted in a rate of 4.55 percent on the six-month bill, still more than three times that paid in January.
However, Greek Prime Minister George Papandreou said that the fall-back EU loans would allow his recession-hit country to focus on overhauling its economy. "Regardless of whether we use this mechanism or not - and this is something that will be evaluated - this is a safety net for our country which will allow us to do our work with greater peace of mind," he said. As Europe's biggest economy, Germany would be expected to cough up more than a quarter of the European total, but Berlin said on Monday that the political agreement to offer 36-month loans at roughly five percent should be seen like a "fire extinguisher" mounted on a wall.
Key regional elections in Germany on May 9 and a hamstrung Dutch interim government through until June each present significant blocks before any monies can physically change hands. Greece has already enacted savage budget cuts and raised a slew of taxes in the face of total debts of about 300 billion euros. Athens has to find around 11.5 billion euros by next month, part of about 54 billion euros needed for all this year to cover debt and budget needs.
Comments
Comments are closed.