Mixed re­ac­tion to con­fi­dence vote vic­tory

Kathimerini English - - BUSINESS & FINANCE -

Prime Min­is­ter Ge­orge Pa­pan­dreou’s vic­tory in a con­fi­dence vote in Par­lia­ment on Tues­day was met with mixed re­ac­tions by the in­ter­na­tional com­mu­nity yes­ter­day.

“This is a solid vic­tory by Pa­pan­dreou,” Wol­fango Pic­coli, an an­a­lyst at the Eura­sia Group in Lon­don, told Bloomberg.

“The first hur­dle has passed. The sec­ond – ap­proval of the medi­umterm fis­cal plan – will be more dif­fi­cult but the gov­ern­ment should man­age to get it ap­proved,” he said.

In a note to in­vestors, HSBC Hold­ings chief Euro­pean econ­o­mist Janet Henry said “fol­low­ing the Greek gov­ern­ment’s vic­tory, we still ex­pect Greece to be given the July dis­burse­ment of 12 bil­lion eu­ros of [Euro­pean Union and In­ter­na­tional Mon­e­tary Fund] funds and an ex­tended pro­gram out to 2014.”

“But the pres­sure is now on the EU to come up with con­crete as­sur­ances on fi­nanc­ing for the next 12 months to fill the gap left by the as­sumed lack of mar­ket ac­cess. Only then is the IMF ex­pected to agree to the next dis­burse­ment of funds.”

The IMF, which is con­tribut­ing one-third of the bailout money for Greece, as well as for Ire­land and Por­tu­gal – the two other eu­ro­zone coun­tries that have re­ceived in­ter­na­tional as­sis­tance – in­sists that adop­tion of the re­form pack­age, which fore­sees ex­ten­sive bud­gets cuts and the sale of state as­sets, is nec­es­sary for the dis­burse­ment of any fur­ther funds.

Speak­ing in Taipei just hours be­fore the con­fi­dence vote in Greek Par­lia­ment, Mo­hamed El-Erian, head of PIMCO, the world’s big­gest bond fund, said he ex­pected Greece to end up de­fault­ing on its debt. “For the next three years, we’re go­ing to see dif­fer­ent economies work out dif­fer­ent prob­lems. For Euro­pean economies, es­pe­cially Greece, it would be through de­fault,” he said.

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