Greek default: 20 days and counting
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Greece may no longer be taking the headlines, but it is still a very serious issue.
Eurogroup President Juncker has said that he expects the Greek political parties to submit their written commitment to the fiscal adjustment programme before the November 29th Eurogroup meeting, stating “I do think that from now till next Tuesday this will happen in a written way and then we’ll be able to take a decision on the sixth disbursement […] It’s up to the Greek government and political parties to check ‘yes’ or ‘no’ to a cross-party agreement […] Would there be no cross-party agreement, the next disbursement would not take place”.
The Netherland’s finance minister said that he will meet his German and Finnish counterparts on Friday to discuss the latest developments in Greece. He also stressed that the Greek opposition leader should put his commitment to the reforms in writing, “otherwise they [Greece] will not get money, absolutely not”.
Greece’s Prime Minister Papademos said that he believed “party leaders will fulfil their duty [providing written commitments]. I’m optimistic that a solution will be found soon. This must be done by the end of the month”. He added that in addition to the second aid programme and the PSI, the government “plans to take further action in the direction of introducing reforms and other measures that will improve competition and competitiveness of the Greek economy as well as underpin economic activity”.
Papademos said that February 19 is only an indicative date and that elections will take place once the government has fulfilled its programme goals.
Dow Jones reported a senior Greek government official as saying, “There is enough money for another 20 days […] Without the loan tranche we will default on the €2.8bn bond payments in December and we won’t be able to pay out salaries and pensions. The situation is very serious and this issue has to be
settled this week”.
According to provisional data published by the Finance Ministry, central government debt rose to €360bn (165% of GDP) by the end of September, growing by 7% compared to the same period in 2010 (€23.6bn)
and €7bn higher than the previous quarter of 2011.
James Bevan is chief investment officer of CCLA, specialist fund manager for charities and the public sector. CCLA launched The Public Sector Deposit Fund in 2011 to meet the needs of local authorities and other public sector organisations. You can follow James on twitter @jamesbevan_ccla
Image: graur codrin / FreeDigitalPhotos.net
