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Victoria Mindova

The first exchange of old Greek government bonds with new ones of 50% reduced value will be held in April this year under the British legislation, said Minister of Finance Evangelos Venizelos to the economic commission in parliament. The bill for the PSI procedure for the debt reduction was submitted to parliament for debate and will be voted on Thursday this week. It will adopt the cuts of supplementary pensions that will be reduced by 10% - 30% depending on their size, and after the reform, their absolute value cannot exceed 225 euro. As of 1 March, the government eliminates collective labour agreements and wages in the private sector will be reduced by an average of 22%.

The collective action clause CACs in the PSI process will be triggered if the involvement of private creditors in debt reduction exceeds two-thirds or 66%. The Minister of Finance has promised that the process will not involve individuals holding Greek government bonds worth less than 100,000 euro but this is under question at present. Deutsche Bank CEO Josef Ackermann said high involvement in the PSI is expected and stressed that Europe has approved the debt reduction in order to stop the spread of the crisis. Negotiations with individual creditors on the debt haircut should be completed by 10 March this year and it will determine when Greece will receive the first tranche of the new financial support. Moreover, the final date of the PSI will determine when to hold the next parliamentary elections, following the arrangement in forming the temporary coalition government of Lucas Papademos. Sources from the right New Democracy quoted by Reuters forecast that the date of the new elections will be 29 April. However, this information has not been officially confirmed.

At the same time, the results of the Athens Stock Exchange are disastrous after the rush of optimism last week that Greece had been rescued. On Tuesday, the basic indicator of the Greek financial market dropped by 5.78% and closed at 751.96 bps. The daily turnover fell to 77.8 million euro after last week, it had reached almost one billion. Financial analysts are commenting that after the five-day enthusiasm, markets have again felt that despite the "great success" of Greece, the country is still ruined and has a whole array of social, political and administrative problems to resolve quickly.

Macroeconomic indicators remain in the red, as the deficit continues to be 10% of GDP as at the end of 2010. Sky reported that the gross domestic product has dropped from 212.54 billion euro to 206.32 billion euro. The trends for 2012 remain gloomy. Over 61,000 small and medium enterprises said they are going to declare bankruptcy this year, which will lead to the loss of 240,000 jobs. This is the result of the market research conducted by the agency MARC on behalf of the union of craftsmen and tradesmen in Greece, which shows the impact of the crisis on the real economy. Another 180,000 small companies said they are facing serious difficulties and may have to declare bankruptcy by the end of 2012.

One in three small traders and craftsmen argued that the biggest problem of the Greek economy is the failure to implement the measures set out in the first Memorandum of financial assistance. Nine out of ten retailers said that the financial situation of their businesses had deteriorated significantly in the second quarter of 2011. The same number of retailers has seen their turnover shrinking, orders dropping and liquid funds evaporating. "The economy and business are stuck in the morass of recession and they will continue to sink, unless something is urgently done to radically change the economic reality. There is a danger of reaching the point of no return and the damage would prove irrperaboe," warned the union of craftsmen and tradesmen.