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On Tuesday, November 15, a new auction will be held for the quarterly interest bonds under the new conditions created after the establishment of the new coalition government, but also under the negative climate, resulting from the events in neighboring Italy.

The amount requested by the Ministry of Finance, amounted to 1 billion euro and with the adoption of non-competitive bids it may reach 1.6 billion, an amount using which the interest bonds maturing will be renewed for the same period.

Officials from the Ministry of Finance believe that there would be no problem with the issue and the amount of 1.6 billion will be covered, despite the liquidity problems experienced by Greek banks. In addition, some banks have started the procedure for increasing their liquidity from the new package of guarantees amounting to 30 billion euro.

As for the interest rates, the trends are for going upwards. Overall, during recent months there has been an increase, and from 4.50 percent in August the interest rate rose to 4.56 percent in September and 4.61 percent in October.

Along with the auction, the Ministry of Finance provides an opportunity for individuals (private depositors) to obtain six-month bills with tax-free dividends, provided that they hold the bills until their maturity.

Regarding the new budget, the Ministry of Finance provides for cuts of salaries, pensions, benefits and allowances. The aim of the ministry is to limit primary expenditure by 5.52 billion euro compared with this year.

It has been estimated that from the cost for the wages in the public sector alone 1.8 billion euro will be cut. The amount to be saved by limiting the subsidies for the funds and the Employment Agency, exceeds 3 billion euro, a fact that portends drastic reductions in pensions (basic and additional). The Ministry estimates that the reduction of pensions will bring 740 million euro in 2012.

As regards the government debt, in the draft budget it has been estimated that it will reach 172.7% of the GDP or 372 billion up from the 356.5 billion (161.8% of GDP) this year. Interest rates for servicing the debt will reach 17.9 billion euros next year from 16.3 billion this year. These data, however, will change after the implementation of decisions from the Summit on 26^th October.

Provided that the government proceeds to cut the Greek bonds, 4.5 billion euro will be saved for the payment of interest rates and the debt will reach lower levels.