ECONOMY

Public debt to eat into spending

Greece?s obligations for servicing the public debt amount to two-thirds of the state?s spending, according to figures published on Tuesday in a circular by Alternate Finance Minister Filippos Sachinidis on how 2012 public spending will be distributed.

Out of the 129.8 billion euros the state will spend next year, some 87.4 billion will go toward servicing the country?s debt. This amount includes the spending related to the Greek bond haircut (PSI+), but does not account for the 32.1 billion euros that will be required for the recapitalization of the country?s lenders in the context of the application of PSI+.

Even that amount may not be enough for banks, as the government?s and its creditors? estimates now take the requirements of Greek banks to 40 billion euros: They take it for granted that the results of the banks? portfolio monitoring by BlackRock Solutions combined with PSI+ will create significant recapitalization needs for local lenders.