ECONOMY

In Brief

Borrowing costs have not hurt budget plan Greece’s soaring borrowing costs have not yet dented the country’s plan to reduce its budget deficit, though it needs lower yields in the «medium term,» according to Barclays Capital. «If Greece manages to reduce its funding costs in the medium term, that’s what is needed,» Laurent Fransolet, head of European fixed-income strategy at the bank in London, said in a telephone interview yesterday. «If you issue a couple of bonds at a very high level, it is not great but it doesn’t change the fiscal adjustment process much.» Greek 10-year bond yields surged more than a percentage point in January and touched 7.16 percent on January 28, the highest since 1999. Prime Minister George Papandreou says his country can’t afford to hold out much longer at current market rates as his government prepares to raise another 10 billion euros ($13.6 billion) to repay bonds due April 20 and May 19. (Bloomberg) Current account deficit rises in January Greece’s current account deficit rose 9.7 percent year-on-year in January to reach 3.7 billion euros ($5.0 billion), mainly due to a wider trade deficit, the country’s central bank said yesterday. «The rise in the current account gap by almost 10 percent in January can be attributed almost exclusively to increased payments for imports, reflecting higher oil prices compared to the same period a year earlier. The drop in imports, excluding fuels, is continuing, while the services surplus is smaller due to lower net receipts from shipping,» said National Bank economist Nikos Magginas. «The current account gap is expected to shrink further to 8.0-8.5 percent of GDP this year as a result of continued weakness in domestic demand.» (Reuters) Bulgarian jobless Bulgaria’s jobless rate rose to 10.3 percent in February from 9.9 percent the previous month as the recession deepens, data from the Labor Ministry showed yesterday. The unemployment rate was 6.7 percent in February last year. The Balkan country has been hard hit by the global economic crisis, as foreign investors flee and companies cut or halt operations altogether due to the plunge in demand. Some 37,478 people joined the dole lines in February, mainly due to layoffs in the processing industry and construction sector, while others either found jobs or dropped off the unemployment register for other reasons, bringing the official jobless total in the European Union’s poorest member state to 380,244 people. (Reuters) Crisis prevention The International Monetary Fund called yesterday for the creation of a European Resolution Authority to deal with the failures of cross-border financial institutions. Dominique Strauss-Kahn, managing director of the IMF, said such an authority should be part of a broader European crisis prevention, management and resolution system. It would be funded by the financial industry from deposit insurance fees and levies on institutions, he said. «What I think is needed is a European Resolution Authority, armed with the mandate and the tools to deal cost-effectively with failing cross-border banks – an ex ante solution to the problems that currently hamper cooperation in crisis situations, rather than an ex post one,» Strauss-Kahn told a conference. (Reuters)