A credit downgrade for Greece's top banks raised the pressure on Athens on Tuesday ahead of a general strike as the government struggled to end a debt crisis that has shaken the eurozone. Ratings agency Fitch said the measures needed to rectify Greek public finances "will have a significant effect on the real economy, affecting loan demand and putting additional pressure on asset quality." Fitch said it was therefore downgrading National Bank of Greece (NBG), Alpha Bank (Alpha), Efg Eurobank Ergasias (Eurobank) and Piraeus Bank to a lower investment status and warned that their outlook was negative. The fresh blow for the Greek economy came as a delegation from the European Commission, the European Central Bank and the IMF arrived in Athens for a three-day visit to assess its bid to tame rampant debt.
Greece's high debt and a collapse in confidence on financial markets over its ability to finance itself have put government bonds under pressure, weakened the euro and pushed the eurozone into crisis. Greece accuses EU over budget scrutiny
Under acute pressure from its 15 eurozone partners, the Greek government has pledged to slash its deficit this year, agreeing to painful public spending cuts that sparked Wednesday's union strike call. IMF stresses deficit reduction in exit strategies
IMF chief economist Olivier Blanchard warned in an interview that European countries like Greece face an "extremely painful" period of budget tightening that could last up to 20 years and will require "sacrifices."
The EU has pledged support for Greece but has also ordered strict monitoring for its deficit-cutting program, sending the three-party team on the first of a string of visits to make sure Athens is on the right track.
"It is a purely technical visit, to examine progress on the Greek plan and provide any help necessary," said a ministry official, who requested anonymity.
The official said the team may meet with Finance Minister George Papaconstantinou at the end of the visit, which wraps up on Thursday.
Athens has ruled out resorting to a "bailout" from the EU or the IMF.
But a report in Germany's Der Spiegel magazine citing German finance ministry sources, on Saturday said the eurozone could aid Greece to the tune of "between 20 billion and 25 billion euros" (27 billion and 34 billion dollars).
A ministry spokesman dismissed the report as "speculation."
Greek anger at German reporting of finance woes
Greece's air, rail and maritime transport are expected to grind to a halt Wednesday as thousands of public and private sector workers down tools from midnight Tuesday (2300 GMT) in anger at the prospect of cuts to benefits.
Called by the powerful GSEE workers' confederation and backed by the civil servant union, the strike is set to shut down schools, government offices and courtrooms, with disruption to banks, hospitals and state-owned companies.
Greece is also facing a news blackout after the strike received backing from the national journalists' union, which penalises members for breaking ranks.
Athens metro and bus lines will run a skeleton service to allow strikers to get to the street demonstrations planned in the city centre.
Despite the scale of the strike, polls suggest that more than six out of 10 Greeks support the government's austerity plans, and three-quarters say social conflicts should be put on hold until the financial crisis is settled.
Tuesday's finance talks kicked off with the head of a finance ministry experts' council, Georges Zanias, with further meetings scheduled Wednesday and Thursday with the Greek Central Bank and labour ministry, the ministry said.
Europe faces 'painful' budget tightening: IMF
Greek politicians meanwhile voiced anger at German media reports on their economy, with Athens mayor Nikitas Kaklamanis branding as "shameful" a front cover of German magazine Focus showing a statue of Venus giving the finger.
"You still owe us 70 billion (euros, 95 billion dollars) for the ruins that you left us with," Kaklamanis said in an open letter to German Chancellor Angela Merkel, referring to compensation for Nazi attacks in World War II.
23.02.2010
