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Another € 25 billion guarantees for the Greek banks

06 August 2010 / 10:08:07  GRReporter
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The Greek government provides guarantees of € 25 billion to enhance the liquidity of local banks. The Minister of Finance George Papakonstantinou announced this during the press conference on the results of the review mission of the IMF, ECB and European Commission. He stressed that the Greek banks currently can not be funded from the international markets due to the difficult economic situation and the state must do anything possible to facilitate liquidity in the country. After the bond guarantees are issued the banks in Greece will be more able to grant consumer and business loans. Thus the business and consumers will take a breath since the beginning of autumn.

A financial stability fund, which has a budget of € 10 billion available to banks in need of emergency assistance, will start to operate in September this year. Papakonstantinou said that the three international consultants are already selected. They will help the government assess the situation and prepare a program for privatization of state enterprises like the national railways, public transport companies and the National Electric Company. He assured the journalists once again that the main package of shares of the Greek NEC will remain public property irregardless of the changes made.

The Minister of Finance explicitly stated that the government will not cut jobs in the public sector, regardless of the expected mergers. Concerning the private sector, George Papakonstantinou ensured that the 13th and 14th salary will be kept. He assured the public that Greece will meet its objectives and the state deficit will be reduced by 4% by the end of 2010.

The problems the ministry will have to solve are delayed collection of state revenues from taxes and public spending to cover the social insurance funds and the deficit in the national health system. Indebted municipalities and other organizations associated with local governments will also have to undergo certain structural changes to optimize their operation.

Tags: EconomyMarketsReformsMemorandum
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