ECONOMY

‘Greece is not the new Dubai’

The noose around Greece’s neck seems to be getting even tighter, as more international bodies and public figures call for stricter measures to streamline the economy, while the government is frantically trying to avert panic from settling in the markets. According to a report by The Financial Times in London, Axel Weber, chairman of Germany’s Bundesbank and member of the governing board of the European Central Bank (ECB), argued that Greece has only one year at its disposal in which to put its finances in order, otherwise there is a serious risk that Greek bonds would no longer be accepted by the ECB, which would reduce funding for Greek banks and of the country’s economy as a result. This statement came a day after the downgrade of Greece’s credit rating by Fitch from A- to BBB+, the first time in a decade the country has found itself in that category. Before the global financial crisis broke, the ECB would not accept state bonds from the B category. Now it has lowered its threshold to the BBB- level. However, given that the world economy is showing signs of recovery, the threshold may soon revert to the AAA- level, which would rule Greece out of ECB funding. Furthermore, Fitch Ratings struck a new blow to the economy and the government, with analyst Chris Pryce stating that the downgrade was due to the fact that the budget did not contain enough measures of a permanent character. He added that the government will have to proceed with a greater and clearer cut in public spending and that, although Finance Minister Giorgos Papaconstantinou has realized the gravity of the situation, this is not true of the rest of the government. At a press conference held yesterday, Papaconstantinou tried once again to calm fears about the country’s economy, arguing that «the government will do all that is needed in order to regain its lost credibility.» He then suggested that Greece is neither «a new Iceland nor a new Dubai. We are a sovereign state, a eurozone member and our understanding of the situation we have inherited and of the measures we need to take is clear.» He stressed that Greece is under the protective umbrella of the euro, «but this will not let us rest at all. We shall not sit and wait for anyone to come and save us.»