Brussels, 19/12/2012 (Agence Europe) - On 19 December, the European Central Bank announced that it is now accepting Greek bonds again for financing operations. The decision removes a restriction introduced in July and takes effect on 21 December. The bank says this has become possible as a result of a positive assessment by the experts of the troika (the European Commission, the European Central Bank and the IMF) on implementation of the Greek structural adjustment programme (spending cuts, structural reforms, privatisation and stabilising the financial sector) introduced by Athens in return for the disbursement of financial aid.
These recent developments have also enabled Greek sovereign debt to become more attractive. On Tuesday, Standard and Poor's (S&P) raised Greek bonds to B- (still junk bonds), a level from which they were downgraded in June 2011. The previous rating had been “partial default,” six notches lower. S&P says the rise is due to Europe's determination to keep Greece in the eurozone by agreeing on a raft of measures to lessen the country's debt burden and get the debt back on track (see EUROPE 10739). S&P says its decision is also due to the Greek government's commitment to properly introduce the structural adjustment and budget measures despite a hostile economic and political environment. The decision was welcomed by the financial markets, with the interest rate demanded for ten-year Greek bonds falling to their lowest level since 2011, close to 12%, on Wednesday.
Greek finance minister Yannis Stournaras cautiously commented that the decision was a first step in recognising the efforts and sacrifices of the Greek people, but said the country couldn't rest on its laurels as there was still a long and difficult road ahead. The Greek government must introduce an €18 billion austerity package from now until 2016 on a recalcitrant population. Protests resumed on Wednesday in the form of strikes across the public sector to protest at the “destruction of public services,” as two trade unions put it. The Greek supreme court has endorsed a new tax on house ownership that will be added to electricity bills. (EL/transl.fl)