Will Greece Restructure?

Loading...
Loading...
Rumors are spreading that the debt-ridden Greece will need to restructure its debt. Early this month, the German newspaper Der Spiegel wrote that the high ranking IMF officials were recommending Greek debt restructuring to the European governments. Later it was rumored that the Germans have taken the same position as the IMF and are about to pressure Greece into restructuring its debt. Germany's Finance Minister Wolfgang Schaeuble was quoted as saying “further measures may have to be taken” if Greece fails a June audit. Even the Greek former Prime Minister Costas Simitis, who guided Greece into Eurozone in 2001, has urged Greece to restructure its debt. The Greek government rejects this idea and instead has pledged a new round of structural reforms, including a completion of a 50 billion Euros state assets sale plan and introduction of a strict fiscal framework to rein in its budget deficit and debt. The Greek Finance Minister George Papaconstantinou said in an interview this Saturday that there is no ongoing plan of debt restructuring and that Greece will be better off without debt restructuring. He has found some support in the French Finance Minister Christine Lagarde and Dominique Strauss-Kahn, the head of IMF. It is feared that any restructuring of Greek debt might put further pressure on Portugal, which had previously submitted its request for a bailout after the Socialist government collapsed over its proposed spending cuts. Portugal's bailout has come under increased pressure following Sunday's election in Finland, which propelled an anti-bailout True Finns party to the third strongest party in Finnish parliament. True Finns are expected to mount a resistance to any bailout proposal for Portugal since Finland is the only European country that requires a parliamentary approval for the proposed bailout. Bad news is coming from the Europe's northern periphery as well as Moody's downgrade of all surviving Irish banks to junk yesterday. To make matters worse, more analysts are turning their eyes towards Spain, the next bailout candidate, especially following yesterday's disastrous short-term auction. It is worth reminding that after a similar blow Portugal was forced to ask for a bailout. Earlier this month, Portugal managed to sell its 12-months Treasury Bills, but only after agreeing to pay an astronomical 6% interest, way beyond 1.32% interest on the equivalent German bonds. The string of bad news from the countries which have applied for a bailout as well as from the next likely candidate – Spain – has taken its toll on the Euro. The European currency fell sharply yesterday to $1.4234 but has regained some of its loses in today's morning session by climbing to $1.4286.
Loading...
Loading...
Posted In: ForexTravelGlobalIntraday UpdateMarketsDer SpiegelIMF
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...