ECONOMY

Aid funds arrive just in time

Greece is expected to receive the first instalment of emergency European Union loan funds today, ahead of an 8.5-billion-euro bond expiring tomorrow, a Finance Ministry official said. The EU’s first payment of 14.5 billion euros will arrive today, the official, who declined to be identified, told Bloomberg. In Brussels, EU spokesman Amadeu Altafaj Tardio confirmed the bloc will send the first loan tranche today. The International Monetary Fund, which is participating in the bailout, made its initial contribution of 5.5 billion euros last week. The loans will cover the nation’s financing needs for May and June. Euro-area ministers and the IMF agreed in early May to a 110-billion-euro aid package for Greece, which is struggling to cut the region’s second-widest budget shortfall. Greece has pledged to implement austerity measures of almost 14 percent of gross domestic product in exchange for the rescue funds, which EU officials hoped would stem declines in the euro. Greece will receive quarterly installments based on a review of its deficit-cutting efforts. According to the Finance Ministry, Athens will receive another 9 billion euros in September, including 6.5 billion from eurozone members and 2.5 billion from the IMF. A third 9-billion-euro installment will be made in December in the same way, the ministry said, adding that a first review of Greece’s austerity program is due in the third quarter of 2010. The effort to backstop Greece failed to stem the slide in the euro and end the decline in bonds of other high-deficit nations such as Spain and Portugal. The cost of insuring against losses on debt sold by the Greek and Portuguese governments rose yesterday, according to CMA DataVision prices for credit-default swaps. Contracts on Greece increased 38.5 basis points to 648 and swaps on Portugal climbed 37 to 285.5, CMA prices show. Meanwhile, IMF chief Dominique Strauss-Kahn said yesterday that Europe must seize on the current crisis to «restructure» its institutions and perfect the shared currency. «There is a single currency but not an economic environment that makes it viable in a period of crisis, that’s what we are seeing,» he said in an interview with Euronews. «I expect Europe to take advantage of the crisis to restructure and renovate the European institutions,» he added. «The euro today is not finished,» Strauss-Kahn said, urging European leaders to «finish what has been started with the construction and launch of the euro.» Strauss-Kahn said «the current crisis is only a Greek crisis,» predicting that the country would «overcome» its problems of high debt and weak international competitiveness. «Growth is key. Why does Greece have so many problems finding growth? Because it has a competitiveness problem. What does that mean? That means that what it produces is more expensive than the same goods or services produced by other countries,» he said. Greeks from abroad to help Greeks living abroad are committed to rounding up investments and contributing technical know-how to the country, as it seeks a new model of economic growth, Prime Minister George Papandreou said yesterday. Members of the diaspora, «especially from the business world,» have committed to mobilizing Greeks around the world to invest in Greece and lend technical expertise to assist its economy as it transitions to a new «growth model,» Papandreou said in a statement after meeting with members of Greek communities abroad. Papandreou, who was raised in the USA and Sweden, told the business leaders in a meeting that Greece is focusing on developing environmentally friendly technologies as a means of improving the country’s economic fundamentals and getting through the fiscal crisis. «A draft bill is currently being discussed in Parliament that will provide the opportunities and incentives in this direction,» Papandreou added. Business leaders present at the meeting with Papandreou came from the fields of energy, financial services, chemicals and information technology, among others.