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New drop in quarterly government bonds interest rate

15 February 2011 / 18:02:30  GRReporter
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New drop in quarterly government bonds interest rate recorded by the Public Debt Management Agency. After the bonds issue the state received 380 million euros at an interest rate of 3.85%. Economic analysts note that the Troika’s message for mass privatization program in Greece gave fruit and the interest rate on quarterly government bonds dropped compared to January 2011, when it was 4.1%.

Agency’s chairman Petros Christodoulos said that over 60% of the interested in the trade were private investors. Total bids received were worth 1.53 billion euros which covered 5.08 times the amount sought. The trade was made by primary dealers and ends on February 18. Non-competitive bids accepted amounted to 90 million euros. According to the primary dealers regulation, non-competitive bids could reach 30% of the total value of the amount traded and will be accepted until 12 pm on Thursday, February 17, 2011.

Meanwhile, it became clear that the President of Eurogroup Jean-Claude Trichet fully supports the 50 billion euros privatization program of Greek public enterprises announced by the mission of the International Monetary Fund, the European Central Bank and the European Commission in Athens last week. At the meeting of eurozone finance ministers he stressed that the privatization program was a good way to reduce the country's external debt and give a positive signal to international markets.

The President of the Institute for Economic and Industrial Research Yannis Stournaras told that Greece could accumulate more than 50 billion euros over the next five years if it properly arranged its priorities. He stressed that apparently there was political will for change, but the government should move at a faster pace, because the progress in many sectors of the economy was insignificant. Investments in projects focused on renewable energy sources, water and waste management, infrastructure network development, tourism, ports and airports would be crucial for the economic upturn of the country and pose a huge potential in the coming years.

Economic Affairs Commissioner Olli Rehn stressed that fiscal consolidation program was implemented well, but in 2011 the Greek government should take up the fight against tax evasion, collection of budget revenues and structural changes in the public sector more seriously.
The same is the opinion of the governor of the Bank of Greece George Provopoulos who presented this week the annual Bank’s report on the fiscal policy of the country for 2010-2011. Provopoulos said that today structural changes should be implemented with determination and with the support of the public opinion, which must be based on the idea that the old regime could not continue.

The Bank of Greece’s forecasts for economic development in 2011 are that inflation will be around 3%, not excluding higher rates. GDP dropped by about 4% in 2010 and by 2.3% in 2009. Deepening recession will inevitably affect employment. There were 100 000 unemployed at the end of 2010 and this trend is expected to deepen in 2011 and unemployed Greeks to exceed 12.5% of the working force in the country.

Real incomes in the country decreased by 9% in 2010. This year the average income of Greek households will fall by 5%, and it is hoped that it will become stable in 2012. The last year’s reduction of real income is the direct result of the increase in inflation to 4.7%. It is mainly due to increases in indirect taxes and rapidly rising fuel prices.

Tags: EconomyMarketsQuarterly government bondsInterest ratesGreece
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