Greece attempted to soothe fears of a debt default this week by promising to move ahead with long-delayed plans to privatise state assets ranging from ports to the gaming industry. It hopes to raise €50bn. The government is also planning further austerity measures, which are due to be unveiled next week. Christian Noyer of the European Central Bank underscored fears of the impact of a Greek default on the European banking system, calling it “a horror scenario”.
What the commentators said
Greece is now redoubling its efforts to avoid default in order to secure the next tranche of bail-out money from the International Monetary Fund, eurozone leaders and the European Central Bank, who are exasperated with it for falling behind on its austerity programme, said Pierre Briançon on Breakingviews. But this programme won’t get far, said Lex in the FT. Even if Athens achieves the “best possible prices”, it won’t raise more than €16bn by 2013. “The headline figure of €50bn is not going to fool anybody.” This is just an attempt to “buy more time… to avoid a restructuring” – even though Greece doesn’t have a hope of getting its debt pile under control.
But the issue can’t be avoided forever, said Lex. Without help, Greece won’t be able to return to the markets next year and it may need an extra €50bn to get it through the subsequent two years. “Greece and its creditors are running out of road down which to kick their increasingly battered can.”