Mixed reaction to confidence vote victory
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.