Germans warn Greece the hard work is not over
Greece’s rulers have backed further austerity measures necessary for their struggling country receiving €130bn in central aid, but primary financier Germany warned Athens must still “do its homework” after repaying the next tranche of loans to fall due, on 20 March.
German finance minister Wolfgang Schaeuble has warned Greece will still miss deficit targets. Despite the money-saving measures its politicians backed last night, it will still face debt of up to 136% of its economic output by 2020, far above the 120% ceiling its central financiers had hoped.
“Greece must still do its homework,” Schaeuble told German newspaper Welt am Sonntag yesterday.
However, EU Economic and Monetary Affairs Commissioner Olli Rehn said the vote 199 to 74 in favour of austerity measures was a “crucial step forward”.
It was also a necessary step before European Union, European Central Bank and International Monetary Fund (IMF) would disburse €130bn of cash to Athens, to meet its short-term debt payments of €14.5bn.
Rehn said he was confident Athens would also find €325m of further savings, as requested by the troika.
A spokesman for German chancellor Angela Merkel said: “Greece’s European partners welcome this; certainly Germany does.”
The euro rose against the dollar on the news, though Europe’s and America’s equity markets were unimpressed by 1715 CET, the Dax down 0.7%, the Cac 40 down 0.2%, though the FTSE 100 rose 0.8%.
Largely ignoring this, Greek rioters angry at the cuts and their own elected representatives continued to skirmish with police in Athens.
Few fund managers see such votes and cash distributions as the final chapter in the eurozone’s, indeed even Greece’s, repair.
Stewart Cowley, fixed income manager at Old Mutual Asset Managers, said it would likely take years for the most indebted countries to shift their economies, and mindsets, to an equal footing with neighbours such as Germany.