Greek bailout could rise to €195bn

Cash_injectionGreece will receive a fresh cash injection of up to €85bn, which would include contributions from private investors, according to reported comments from Austrian Finance Ministry official Thomas Wieser.

The bulk of this, 70%, will come from Eurozone states and private investors, with the International Monetary Fund (IMF) providing the rest, say the reports.

In addition to last year's agreement, this would push the sum received by the struggling state to €195bn.

However, Azad Zangana, European economist at Schroders says this additional bailout “by no means resolves the situation”.

“The Greek government is faltering under the pressure placed on it from both sides: The Troika [the IMF, European Union and European Central Bank (ECB)] to tighten faster, and its public who are feeling the pain of austerity,” he said. “We continue to expect some form of restructuring which will include writing off large amounts of Greek debt at some stage in the coming years.”

David Miller, partner at Cheviot Asset Management, also urged caution.

“The unknown is whether the Greek voters will cooperate with the politicians' plan and timetable,” he said, referring to the programme of cuts that the Greek parliament voted through this week.

“Austerity measures may be passed, but the Greek voters will keep investors twitchy.”

©2011 funds europe