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July 31, 2021

Greece default would hurt other countries, says Moody’s

The Greek opposition  leader has rejected the government’s  request to support a four-year austerity, radical  privatization  plan.

ATHENES – Any Greek debt default would likely hurt the credit rating of other peripheral eurozone countries, the ratings agency Moody’s has warned, the BBC informs. In a statement on the impact of a potential default, Moody’s said such a default would also hurt Greek banks. Moody’s also became the latest agency to say any kind of restructuring of Greek debt would constitute a  default. Meanwhile, the Greek opposition leader has rejected the government’s request to support a four-year austerity plan. The plan would lay out deficit reduction mea- sures that go two years beyond the next general election. Greece’s European partners had demanded cross-party support for the plan after talks last week on possible further bail-out mea- sures. Antonis Samaras, leader of  the New Democracy party, said he believed the austerity demanded by Brussels would hurt the country’s economic recovery. “I am not going to agree to this recipe, which has been proven wrong,” said Samaras after meeting Prime Minister George Papandreou. The head of the Communist party, which is influential with trade unions, refused even to meet him. The government has a major- ity in parliament and does not rely on opposi- tion support for its current austerity budgets.

Greece has pledged to press ahead with a radical privatization plan in an effort to help reduce its high level of debt. Prime Minister George Papandreou (photo) announced an immediate sale of  state assets on  Monday evening, including its shares in the telecom operator OTE and the ports of Piraeus and Thessaloniki. Following a  cabinet meeting, Papandreou announced EUR 1.6 bln (USD 2.3 bln) in savings along with the privatization measures. A quarterly audit of Greek finances by the European Central Bank (ECB), the International Monetary Fund (IMF) and the European Union has yet to approve the release of the additional  EUR 12 bln in funding for Athens. The audit is heading into an unprece- dented third week.


European stocks traded higher Tuesday, with commodity-related plays rebounding from previous session losses, while healthy economic readings from  Germany and  a  successful Spanish Treasury bills auction combined to offset some worries about the health of the euro- zone economy. Worries about Greece’s future in the euro zone remain as the leader of the coun- try’s main opposition party rejected Tuesday the government’s latest measures to reduce the bud- get deficit and criticized the ruling party for fol- lowing a misguided policy of fiscal and eco- nomic reform. Monday, euro set a fresh record low against the Swiss franc and fell below USD 1.40 before recovering slightly. U.S. stocks took their cue from European markets and were lower in midday trade. In Athens, the ASE Composite index fell 1.3 pc to 1280.10 after Fitch Ratings last week downgraded  Greece’s debt rating. The euro weakened for a third day against the yen on speculation Europe’s sover- eign-debt crisis is worsening as the region’s industrial expansion slows. The euro fell to 115.02 yen as of 9:40 a.m. in Tokyo from 115.20 yen in New York yesterday, when it dropped 0.4 percent.

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