Thu, May 10, 2012 - Page 10 News List

Greece doubts rescue funds to be released

NO COMMITMENT:Although the EU has confirmed to Athens that the latest tranche of rescue loans would be approved, fears are that the payment could be held back


Greece, still without a government since no clear winner emerged in general elections, expressed doubts yesterday that the EU and IMF would release crucial rescue funds due later this week.

“There are questions on securing” the latest tranche of rescue loans, said Gikas Hardouvelis, economic advisor to outgoing Greek Prime Minister Lucas Papademos, on Skai Radio.

“Why would they give us money?” if Greece deviated from its commitments, Ghikas added, as has been promised by most of the anti-austerity parties that saw great gains in Sunday’s elections.

According to center-right daily Kathimerini, the EU has confirmed to Athens that the 5.2 billion euro (US$6.74 billion) tranche would be approved, though news Web site To Vima speculated that the EU might decide to hold the payment to put pressure on Greece.

General elections on Sunday did not produce a clear winner, but gave an overwhelming boost to leftist party Syriza, which now has 52 deputies in parliament, making it the second-biggest party.

The main parties that have pledged to continue deficit-cutting reforms, New Democracy and socialist Pasok, now only send a combined 149 MPs to the 300-seat parliament, not enough for a re-run of the outgoing coalition led by technocrat Papademos.

On Monday, the IMF said it was waiting for a new government to be formed in Greece before deciding on how to move forward.

Asian markets and the euro fell yesterday on fears that Greece could leave the eurozone after Syriza said it would rip up a bailout deal following the weekend elections.

Tokyo fell 1.49 percent, or 136.59 points, to 9,045.06 and Seoul dropped 0.85 percent, or 16.72 points, to 1,950.29.

Sydney fell 0.91 percent, or 39.2 points, to 4,275.1 after the government unveiled a budget on Tuesday aiming to reverse its deficit and put the economy in surplus by next year.

Hong Kong shed 0.75 percent, or 154.11 points, to 20,330.64 and Shanghai closed down 1.65 percent, or 40.29 points, at 2,408.59.

“The failure of the Greek election to produce a new government provides some support to our view that Greece could leave the eurozone as soon as the end of this year,” London-based Capital Economics said in a note.

The concerns pressured the euro, which fell to US$1.2990 and ¥103.70 in late afternoon Asian trade, compared with US$1.3005 and ¥103.84 in New York late on Tuesday. The US dollar was at ¥79.79, compared with ¥79.84.

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