Greek PM pledges details on reforms after Easter
By
Dina Kyriakidou and George Georgiopoulos
ATHENS | Fri Apr 15, 2011 9:49am EDT
ATHENS (Reuters) - Greek Prime Minister George Papandreou said on Friday fresh fiscal and privatization plans would be spelled out in a few weeks, offering little to appease financial markets nervous over a possible debt restructuring.
Government officials had said the announcement would send a message to investors that
Greece was determined to meet its targets. But Papandreou gave little initial detail on how he would achieve deficit cuts and selloffs, although more was expected from the finance ministry later in the day.
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The plan will be completed in the coming weeks and will be then submitted to parliament," Papandreou told a cabinet meeting. "Today we are presenting the basic guidelines of a roadmap that will lead us from the Greece of crisis to the Greece of creativity."
Greece had been expected to announce sell-offs, benefit cuts and effective tax hikes to save about 23 billion euros to bring its budget deficit to about 1 percent in 2015 from about 10 percent in 2010.
"There appears to be very little new in his statement. It is disappointing given previous speculation he was about to announce some significant changes," said Chris Pryce, analyst at Fitch Ratings.
Spreads between Greek 10-year bonds and German bunds remained above 1,000 basis points and Greek stocks lost about 2.7 percent of their value on the lack of specific measures.
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The stock exchange benchmark index started firm as the cabinet meeting got going but then turned negative," said Theodore Krintas, head of wealth management at Attica Bank.
"The prime minister's speech brought no clarity, uncertainty remains. What the market would have liked was a specific timetable for the part of privatizations that refer to 2011, this should have been spelled out," he added.
To comply with the terms of a 110 billion euro EU/IMF bailout that saved it from bankruptcy last year, Greece must also spell out how it intends to raise 50 billion euros from privatizations by 2015, a target which many analysts and Greek politicians see as optimistic.
The adoption of the mid-term fiscal plan was scheduled before increased speculation about restructuring, an unexpected upwards revision of its 2010 deficit and below-target revenues in January and February put additional pressure on Athens. Greek unemployment also hit a new record of 15.1 percent in January.
European policymakers have scrambled to reassure investors this week that a restructuring for Greece was not on the agenda, saying such a step could have dire consequences for European banks and the fragile economy of the 17-nation
euro zone.
But Germany's finance minister has acknowledged that further steps may be necessary and analysts say that could involve asking bond investors voluntarily to accept changes such as smaller or later payments.
The premium investors demand to hold Greek government bonds rather than benchmark German Bunds topped 1,000 bps on Thursday for the first time since Athens got its bailout in May 2010.
Analysts said the additional measures were necessary for Greece to meet its targets but would do little to ease restructuring concerns in the short term.