Greek finance minister says markets will calm after they get detail on standby bailout loans
MADRID (AP) - Greece's finance minister said Saturday that market worries over Greek bonds could calm when the country agrees more details on standby loans with European Union and International Monetary Fund officials after talks next week.
George Papaconstantinou told reporters that Greece has passed its "most difficult" month for refinancing its swelling debt by successfully selling some euro12 billion of debt in April. It needs to sell more than euro10 billion in May, he said.
He claimed that Greek government moves to reduce its budget gap and the provision of some euro45 billion in bailout loans from the IMF and other countries that use the euro should now reassure investors.
He also sought to soothe fears that a bailout would be slow in coming, saying other eurozone countries told him that parliamentary approval would take "one week or two weeks at the maximum."
Spreads, or the difference between Greek and benchmark 10-year German bonds, soared last week on news that Germany would require a vote from its parliament, which can sometimes take months.
"Markets are pushing to see more detail and more specifics on the support mechanism," Papaconstantinou said, also blaming high interest rates on "people out there trying to make a buck" by betting on the chance that Greece could be unable to repay debt.
Some of that detail should come from technical talks due to start Monday when officials from the European Commission, the European Central Bank and the IMF are due to arrive in Athens to talk about the conditions for loans and how the loans will be financed.
Greece requested the talks Thursday. Papaconstantinou insisted that this was "not tantamount" to asking for a bailout.
He warned that the "Icelandic cloud" of volcanic ash grounding flights in northern Europe could prevent those officials from coming. There is no timetable for concluding the talks, he said.
Greece will remain on track to reduce its deficit by four percentage points even if the EU statistics agency revised its yearly budget gap up, he said. He estimated the deficit at 12.9 percent — higher than an earlier forecast of 12.7 percent.
Greece shocked markets and other countries in the 16-nation European currency zone when it said last September that its 2009 deficit would be four times above the EU's maximum limit of 3 percent of national income.
That set off a series of shockwaves, sending the euro tumbling and hiking the cost of Greek government borrowings as markets demanded higher interest rates to lend to a country they believed could default on its debt.
