ECONOMY

In Brief

IMF: Crisis in Greece unlikely to spread NAIROBI (Reuters) – The crisis over Greece’s debt mountain is unlikely to spread to other eurozone countries with high levels of public debt, International Monetary Fund managing director Dominique Strauss-Kahn said yesterday. In an interview with Reuters in the Kenyan capital, Nairobi, Strauss-Kahn dismissed market speculation of potential default by other heavily indebted eurozone countries such as Portugal, Spain or Ireland as scaremongering. «You can add to the list all of the countries in the eurozone, to try to scare people about everything. I don’t think it will happen,» he said. «We have a problem with Greece. We don’t have a problem with Spain to date. The eurozone has to deal with the Greek problem. They are doing this. No one knows what’s going to happen tomorrow morning but there’s no reason why the spillover to Portugal or to Spain will take place.» Separately, Strauss-Kahn, who is on a tour of Kenya, South Africa and Zambia to see how the poorest continent has bounced back from last year’s global economic crisis, said he was confident eurozone countries could handle the Greek debt maelstrom. Greek Prime Minister George Papandreou said last week he might have to go to the IMF to meet debt obligations falling due in April if the European Union did not help with funds. Bulgarian banks risk being sucked under Bulgaria, the European Union member boasting the bloc’s smallest budget deficit, risks seeing its banks sucked under by the fiscal sins of neighboring Greece, Fitch Ratings and Capital Economics Ltd warned. Almost a third of Bulgaria’s banks are owned by Greek parents such as National Bank of Greece SA and Alpha Bank SA, whose funding costs are set to jump after the government’s 12.7 percent deficit last year prompted credit downgrades that left Greece’s debt the lowest-ranked in the euro area. Austerity steps will erode bank profitability and capital, spurring financial instability that will spread across the Balkans, analysts said. «The most likely channel of contagion from Greece to Southeastern Europe is through the Greek bank subsidiaries,» said Mark Young, head of emerging market banks at Fitch Ratings in London, in a March 2 interview. «Any funding and liquidity pressures at the Greek parent level could flow through to impact the behavior of the subsidiaries.» The Greek debt crisis has taken its toll on the nation’s banks. Following its downgrade of government debt, Fitch on February 23 lowered the credit grades on four Greek lenders, and Standard & Poor’s and Moody’s Investors Service have indicated they may follow suit. (Bloomberg) Romanian jobless Romania’s unemployment rate rose to 8.3 percent in February from January’s 8.1 percent, the employment agency said yesterday. Falling demand from the eurozone, Romania’s main trading partner, has hurt Central and Eastern European economies, forcing many companies in the state-controlled and private sectors to cut output and lay off personnel. (Reuters)