Greece could still drag Europe into a deeper financial crisis and the country?s exit from the eurozone is possible this year, according to Fitch Ratings.
Speaking at a news conference, Fitch managing director David Riley warned on Tuesday that an exit by Greece from the eurozone in 2012 was a possible option. He added that even a 60 percent haircut to Greek bonds would not lead to a substantial reduction of the country?s debt. However, he stated that his main worry was Italy, whose debt and refinancing needs are particularly high.
Meanwhile Credit Management Association puts Greece?s chances of a default in the next five years at 93.8 percent, according to a report it published on Tuesday.
Athens is hoping debt swap talks will be concluded as soon as possible as the March deadline for a bond of 14.5 billion euros is looming large. It will also try to plug the hole opened by lagging revenues that failed to reach their target last year.
Reports suggested that the Finance Ministry will do its best to contain the 2011 budget deficit to between 9.5 and 9.7 percent so that the new measures for 2012 will not have to fetch anymore than 1 billion euros.
At the same time the state?s overdue debts to third parties remain high, amounting to 6.63 billion euros in the January-November period. This is not seen being paid until the government has received the next tranche of bailout money, expected for March.
The ministry with the highest debts is that of National Defense, which owes 292 million euros, followed by the Infrastructure Ministry (269 million euros).