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Greece in danger of losing bailout money

Stephen Beard May 30, 2011
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Greece in danger of losing bailout money

Stephen Beard May 30, 2011
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Tess Vigeland: Demonstrations continued in Greece today against proposed austerity measures. Last night tens of thousands of protesters marched on central Athens to oppose demands by the International Monetary Fund for more belt-tightening. The protests come at a highly sensitive time. Officials from the EU and the IMF are in Athens assessing whether Greece should receive the next installment of its bailout loans. Last year the Greeks were promised more than $150 billion worth. But only in exchange for tough measures to cut the budget deficit.

Marketplace’s Stephen Beard has more from London.


Stephen Beard: Greece is supposed to get its latest cash transfusion by the end of June — some $17 billion. But, before they lend the money, the EU and the IMF must satisfy themselves the country has got its finances in order. It hasn’t, says “Der Spiegel.” The German magazine claims that Greece still has not done enough to cut its deficit and so could be denied the bailout cash.

That would be a disaster, says Dragana Ignjatovic of IHS Global Insight.

Dragana Ignjatovic: Any indication that that the international community will withhold money from Greece could have a very negative impact on the stability of the Greek economy as well as the wider Eurozone.

She says it could trigger a tidal wave of speculation that could sink the euro.

Matina Stevis of the Elefterotypia newspaper in Athens says Greece will probably get the bailout money, but it will be told to speed up its deficit reduction. That means raising taxes and cutting public spending. After five days of anti-austerity protests, she says that won’t go down well with the public.

Matina Stevis: People are disillusioned. They’ve lost all hope. And I feel that there is not much appetite for any other sacrifices at a personal and collective level.

Many analysts believe the only way out is for Greece to restructure its debt, for example to negotiate later repayment. But a senior member of the European Central Bank dismissed that out of hand today. He said the financial markets would go crazy.

In London, I’m Stephen Beard for Marketplace.

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