EU seeks to keep cri­sis fight on track af­ter Greek vote

The Pak Banker - - Front Page -

FRANKFURT

Greek law­mak­ers’ mid­night ap­proval of a 2013 aus­ter­ity bud­get put the onus on Euro­pean fi­nance min­is­ters meet­ing later to­day to keep their three-year cri­sis fight on track. The fi­nance chiefs gath­er­ing in Brussels in­tend to pre­vent a 5 bil­lion-euro ($6.4 bil­lion) Greek bill re­demp­tion on Nov. 16 from trig­ger­ing an ac­ci­den­tal de­fault, while they’re un­likely to rat­ify a 31.5 bil­lion-euro pay­ment to Greece that has been frozen since June, a Euro­pean of­fi­cial said Nov. 9. Greek law­mak­ers’ mid­night ap­proval of a 2013 aus­ter­ity bud­get put the onus on Euro­pean fi­nance nmin­is­ters meet­ing later to­day to keep their three-year cri­sis fight on track. “We re­main con­fi­dent that Euro­pean sup­port will be agreed on by the end of Novem­ber, or early in De­cem­ber,” Erik Nielsen, Lon­don-based chief global econ­o­mist at UniCredit, wrote in a note to clients. With the euro-area eco­nomic slow­down reach­ing Ger­many and stok­ing mount­ing pub­lic protests in France and Spain, Ger­man Chan­cel­lor An­gela Merkel will travel to Lis­bon to­day, fol­low­ing her trip last month to Athens.

Euro­pean Cen­tral Bank Pres­i­dent Mario Draghi said last week the out­look for the euro area is wors­en­ing. The euro has fallen 0.8 per­cent against the U.S. dol­lar since Nov. 7.

The Euro­pean min­is­ters will as­sess whether the lat­est round of cuts that Greek Prime Min­is­ter An­to­nis Sa­ma­ras squeezed through par­lia­ment with 153 of 300 votes, are suf­fi­cient to war­rant fur­ther aid. Sa­ma­ras to­day gar­nered the sup­port of enough law­mak­ers from his three-party coali­tion to se­cure ap­proval for the 2013 bud­get.

Sa­ma­ras has pressed for two ex­tra years, un­til 2016, for Greece to meet deficit-re­duc­tion tar­gets im­posed by its cred­i­tors. That prospect opens a de­bate about how to plug the re­sult­ing fi­nan­cial hole, such as engi­neer­ing a buy­back of Greek debt. Euro­pean lead­ers’ cur­rent tar­get is to re­duce Greek debt to 120 per­cent of gross do­mes­tic prod­uct by 2020. The Euro­pean Com­mis­sion last week es­ti­mated the ra­tio in 2014 will rise to 188.9 per­cent from 176.7 per­cent this year.

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