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01 July 2011: SH: Greek bail-out to rise to €195bn

- Azad Zangana

Greek bail-out to rise to €195bn: Newswires are reporting that EU Officials have announced that Greece could receive a new bail-out worth an extra €85bn. Taking last year’s agreement into account, total aid for Greece could total a huge €195bn….


Azad Zangana, European Economist di Schroders 
 


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    Comment: It seems EU officials are making good progress to having a new agreement in place by the start of next week. This should pave the way for the Troika (IMF/EU/ECB) to release the next €12bn tranche of funding to Greece and ensure that an accidental default will not occur in the coming months.  

    The top up of €85bn to €195bn should be enough to cover Greek funding needs until 2014  if Greece is able to make good progress on its privatisation programme and cutting its public deficit. 

    Though the new agreement will avoid the very negative scenario of a default for both Greece and financial markets in the short-term, it by no means resolves the situation. The Greek government is faltering under the pressure placed on it from both sides: The Troika to tighten faster, and its public who are feeling the pain of austerity. We continue to expect some form of restructuring which will include writing off large amounts of Greek debt at some stage in the coming years.

     


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     Source: ETFWorld – Schroders

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