Tags: Austria | Greek | Aid

Austria Threatens Greek Aid Transfer Over Deficits

Tuesday, 16 Nov 2010 11:06 AM

Austria is threatening to block its next transfer of funds to Greece unless the government gets back on track with a deficit-cutting plan agreed just six months ago with the European Union and International Monetary Fund.

“We are getting indications that the Greeks can’t stick to their plan in a sufficient manner, in particular on the revenue side,” Proell said according to a finance ministry e-mail that confirmed remarks made after a cabinet meeting today. “The data we have at the moment doesn’t give any reason to approve the December tranche from the Austrian point of view.”

Greek bonds tumbled as concern mounted that the debt- strapped nation, which received a 110 billion-euro ($149 billion) bailout in May, won’t be able to cut its budget deficit fast enough. The government said yesterday that it will manage to curb the shortfall to 9.4 percent of gross domestic product this year, compared with a May pledge of 7.8 percent.

The extra yield that investors demand to hold 10-year Greek bonds over German counterparts rose 10 basis points to 896 basis points today. It touched a closing record of 965 basis points on May 7.

Greece receives cash from the EU and the IMF in quarterly installments following an assessment of the country’s progress in cutting the deficit. Austria’s share of the EU aid tranche, which is due in December, is worth 190 million euros, Proell said.

Greek Plans

While Greece still says it will bring the shortfall below the EU’s 3 percent ceiling in 2014, Proell said he will ask the country’s finance minister at a meeting in Brussels today how he plans to do this.

“We want to see how the Greeks will tighten their original plans to stick to this plan,” said Proell in the statement. “The Greek minister will today give a clear overview. If this is clear and the numbers are credible, we’ll have new data.”

The bond market selloff comes as Europe’s sovereign debt crisis, which was sparked by Greece a year ago, enters a new stage. Ireland is in talks with EU and the IMF about seeking a bailout for both its public finances and the country’s ailing banks, said a European official familiar with the negotiations. Cyprus, another euro member, had its long-term sovereign credit rating lowered to A from A+ by Standard & Poor’s Ratings Services today.

Tensions between Greece and Germany rose before the meeting. Greek Prime Minister George Papandreou yesterday criticized Chancellor Angela Merkel’s proposals to force bondholders to shoulder more of the burden from bailouts. Her finance minister, Wolfgang Schaeuble, rejected the remarks.

“When I heard the comments by the Greek prime minister I thought, with all due respect, that Greece has enjoyed a lot of European and German solidarity,” he said. “But solidarity is not a one-way street. That shouldn’t be forgotten in Greece.”

© Copyright 2017 Bloomberg News. All rights reserved.

 
1Like our page
2Share
Headline
Austria is threatening to block its next transfer of funds to Greece unless the government gets back on track with a deficit-cutting plan agreed just six months ago with the European Union and International Monetary Fund. We are getting indications that the Greeks can t...
Austria,Greek,Aid
474
2010-06-16
Tuesday, 16 Nov 2010 11:06 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved