Brussels, 10/11/2011 (Agence Europe) - On Thursday 10 November, the Greek president, Karolos Papoulias, asked former deputy head of the European Central Bank, Lucas Papademos, to form a new national unity interim government to negotiate the second Greek bailout package with the country's international creditors on the basis of the agreement reached by the eurozone summit on 27 October (see EUROPE 10483). “It was agreed that the goal of the new government is to implement decisions relating to the October 26 summit and implement the economic policy connected to these decisions”, Papoulias said after a five-hour meeting with the country's leading political parties. Papademos reportedly asked the leader of the socialist party, outgoing prime minister George Papandreou, and the leader of the New Democracy conservative party, Antonis Samaras, to back the second Greek bailout programme in writing, as demanded by the Eurogroup (see EUROPE 10491). The programme includes public aid of €130 billion and voluntary private sector aid of €100 billion (in the form of a 50% write-down in the face value of Greek bonds held by the private sector). Papademos also called for the general elections planned for February 2012 to be postponed.
The president of the European Council, Herman Van Rompuy, and the president of the European Commission, Jose Manuel Durao Barroso, said: “The agreement to form a government of national unity opens a new chapter for Greece. It is important for Greece's new government to send a strong cross-party message of reassurance to its European partners that it is committed to doing what it takes to set its debt on a steady downward path. The voluntary bond exchange with private sector investors should take place as planned at the beginning of 2012.”
In its newly published Autumn Growth Forecasts (see separate article), the Commission expects the recession to continue next year in Greece and for the country's economy to shrink by 2.8%. The Greek deficit will come down from 8.9% to 7% of GDP, but the debt will shoot up from 162.8% of GDP to 198.5% (partly due to the shrinking economy). Unemployment will continue to rise next year, to 18.4% of the working population. (MB/trans.fl)