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Angela Merkel: First agreement with the IMF and only after that support

24 April 2010 / 09:04:51  GRReporter
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German Chancellor Angela Merkel poured a cold shower on the Greek hopes for quick funding from the eurozone, who unequivocally stated that German taxpayers' money will go to repay the Greek debt only after the agreement with the International Monetary Fund. Merkel had a long telephone conversation with Greek Prime Minister George Papandreou, whom she assured that before reaching to a strict program to drastically reduce government spending in Greece, Germany can not commit to a specific amount. Chancellor also insisted in the final agreement between Greece, the European Commission, European Central Bank and the International Monetary Fund to record that the Greek economic crisis threatens the stability of the euro.

The mechanism for assistance to Greece will be activated only after agreement is reached between the missions of the International Monetary Fund and the European Commission, which are currently located in Athens. This said the president of Eurogroup Jean-Claude Juncker in a joint statement with the European Central Bank and European Commission. This weekend, however, eyes are all fixed on Washington, where the Greek Finance Minister George Papakonstantinou will have a meeting today with the Executive Director of the International Monetary Fund Dominique Strauss-Kahn, and European Commissioner for Economic Affairs Olli Rehn, and on Sunday there will be another meeting of four eyes with Dominique Strauss-Kahn.

Meanwhile, after an initial positive reaction of international markets for Greece's decision to request activation of the European rescue plan, investors are again took their firm positions. The index of the Athens Stock Exchange, which at the middle of yesterday registered an increase of 4.31 per cent at the end of the day gave a lot and finally ended with a minimal decline of 0.15 per cent. The spread-index of Greek government bonds with 10 years maturity, which in the middle of the day had dropped to 511 basis points "closed" the week at 560 points. The same trend is observed with cds-insurances, which, despite the initial drop rose again and landed at 565 basis points. These are the highest insurances against the bankruptcy of a European country which "won" even against the "champion" in this respect Ukraine.

Before the Bloomberg agency a representative of the Greek government has stated that it is possible that Greece requests an advance payment before the completion of negotiations with the IMF and the EU in order to be able to repay bonds for 11.3 billion euros falling due to expire on 19 May.

Tags: economic crisis rescue plan Angela Markel IMF stock news
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