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    February 27, 2012

Moody's: Greek Debt Default Risk 'Remains High'

   VOA News

   Moody's credit rating company says the risk of Greece defaulting on its
   loans "remains high," even after European leaders approved a new
   financial rescue for the country.
   The financial services firm Monday called the $172 billion Greek rescue
   package, the country's second in two years, "an important step
   forward." But Moody's said Greece's debt will "remain large" for years,
   even as large private creditors have agreed to eliminate more than half
   the debt the country owes them -- a $142 billion reduction.
   Moody's said the Athens government is unlikely to be able to secure new
   loans on its own in world financial markets when the bailout money runs
   out in the next few years.
   Moody's bleak assessment came as the German parliament was set to give
   its approval to the bailout even as surveys in the country showed that
   Germans overwhelmingly oppose further assistance for Greece. Germany's
   largest newspaper, Bild, ran a front-page headline saying "Stop!" and
   urged lawmakers to vote against the Greek bailout.
   On Sunday, finance ministers from the world's 20 leading economies said
   the European Union must commit more money to a fund aimed at containing
   the eurozone debt crisis before other nations will provide additional
   resources to the International Monetary Fund. European governments have
   already established a $672 billion rescue fund for future financial
   emergencies that is set to take effect in July, but G20 countries are
   pressing Europe to combine that with money remaining in a temporary
   fund to create a $1 trillion account.
   After a two-day meeting in Mexico City, the G20 issued a statement
   saying that while recent signs point to a "modest global recovery,"
   high risks remain.
   IMF Director Christine Lagarde said none of the G20 countries argued
   with the necessity of expanding the IMF financial firewall. The
   Washington-based agency is seeking a $500 billion fund to go along with
   a "properly sized" commitment from Europe.
   "They all expect that the eurozone, the euro area rather, will
   strengthen, consolidate, reinforce its firewall and make sure that it
   is both adequate and credible before they look at increasing the
   firepower of the (IMF) fund," she said.
   European countries have pledged nearly $200 billion to the IMF, but so
   far other countries have been reluctant to contribute more money unless
   Europe bolsters its own rescue fund. The 17 countries that use the euro
   currency are set to discuss the "strength" of their bailout resources
   next month.
   U.S. Treasury Secretary Timothy Geithner said G20 ministers are
   encouraged about the progress Europe has made in the past few months,
   but that rescue funds are not the only solution to the crisis.
   "A durable solution requires both a sustained period of economic reform
   and a substantial financial firewall to support those reforms," he
   said. "European policy makers recognize the magnitude of the challenges
   ahead and they will be reviewing additional steps in the weeks ahead."
   Following the G20 meeting, European economic minister Olli Rehn praised
   what he called a "clear roadmap" and said he was confident of a
   positive conclusion.

   Some information for this report was provided by AP and Reuters.

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