Sunday 19 January 2020

Germany looks to private sector for Greek bailout

Opposition politicians insist taxpayers' money is not used to rescue foreign state

George Papaconstantinou, Greece's finance minister, at the Economist Conference in Athens, Greece, yesterday
George Papaconstantinou, Greece's finance minister, at the Economist Conference in Athens, Greece, yesterday

Carl Mortished

GERMANY'S top banker, Josef Ackermann, has been asked to orchestrate a private sector contribution to the Greek bailout.

The chief of Deutsche Bank has been asked by Wolfgang Schauble, the German Finance Minister, to co-ordinate a response after complaints by German opposition politicians that banks and bond holders were not sharing the pain of a Greek rescue with taxpayers.

Eurozone governments were yesterday waiting for a signal from Athens that a deal had been completed between the Greek government, the European Central Bank (ECB) and the International Monetary Fund that would unlock up to €120bn of rescue finance.


Greece must redeem €8.5bn of government bonds by May 19, but a loss of confidence in its ability to pay has left it shut out of the bond markets.

Pressure continued to mount on Greece yesterday when Moody's, a leading debt-rating agency, downgraded nine of its banks, including National Bank of Greece, because of their "weakening stand-alone strength" due to challenging economic prospects, low business growth and increased loan quality problems.

Increasing discontent over the role of rating agencies in Greece's troubles came to a head yesterday when a board member of the ECB said that Standard & Poor's (S&P) had been too quick to downgrade the country's credit rating to "junk" on Tuesday.

Ewald Nowotny, the governor of Austria's central bank, said that it was "very problematic that S&P changed its ratings for Greece while negotiations about the measures were still going on".

Talks continued yesterday in Athens over the details of an austerity package -- a promise to implement a new budget of spending reductions and tax increases aimed at cutting €24bn from Greece's deficit.

The deal is expected to be announced this weekend by Greek Prime Minister George Papandreou. A meeting of the eurozone finance ministers will be held in Brussels tomorrow. Luxembourg's Jean-Claude Juncker, head of the finance ministers, described the session as "an extraordinary meeting".

The acceptance of the austerity package by the ministers will trigger national action, most notably a bill in the German parliament to authorise the rescue loans.

Germany, the biggest contributor to the eurozone rescue package, has been a stumbling block because of public opposition to the use of taxpayers' money to rescue a foreign government.

Germany's Socialists, the main opposition party to Angela Merkel's coalition, called for banks to share the pain of a rescue this week and urged the government to work towards a financial market tax or levy on the banks across Europe. (© The Times, London)

Irish Independent

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