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Greek borrowing rates soar on market worries

Greek borrowing rates soar on market worries

Greek borrowing costs shot up Tuesday as markets became increasingly worried that a European bailout plan would prove insufficient to contain the country's debt crisis.
A Finance Ministry official denied reports that Athens was seeking to revise a deal hammered out last month which would provide Greece with bilateral loans from eurozone countries and the International Monetary Fund to avoid default.
But the market jitters sent borrowing costs sharply higher, with the spread between Greek 10-year bonds and equivalent German issues surging to 406 basis points Tuesday afternoon from about 360 points earlier in the day.
The Greek official, who spoke on condition of anonymity in line with ministry policy, denied reports that Athens was seeking to avoid IMF participation in the deal. Greece respected the March 25 agreement, the official said.
On Wednesday, inspectors from the IMF are due in Athens to review progress in government austerity cuts. Greece has promised draconian fiscal reforms to reduce debt but remains under pressure from high borrowing costs.
The two delegations from the IMF are expected to stay for about two weeks and will meet this week with Finance Minister George Papaconstantinou, Finance Ministry officials said. They will also review an overhaul of Greece's tax system.
It is the first inspection since the bailout agreement on financial assistance which has so far failed to convince markets that Athens is on the road to recovery.
A lack of detail on the bailout plan, looming debt repayment deadlines, and modest demand for (EURO)5 billion worth of seven-year bonds sold on March 29 have maintained market uncertainty.
Shares on the Athens Stock Exchange also suffered, with the general index down 2.8 percent at 2,035.94 in late afternoon trading.
Greece must borrow (EURO)54 billion ($72 billion) this year, but has so far raised less than half of that amount on the international markets. It needs to roll over some (EURO)20 billion ($27 billion) in debt in April and May.
The IMF is helping oversee tough inspections of Greek public finances, along with the European Commission and European Central Bank. The next assessment of Greece's progress is due in mid-May.
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Associated Press writer Elena Becatoros contributed.


Updated : 2021-01-22 04:55 GMT+08:00