Greece in 50bn-euro privatisation

The ability of weaker eurozone countries to pay their debts is constantly being questioned by the markets

Greece is preparing to unveil new austerity measures on Friday to try to steady investors’ faith in its creditworthiness.

Talk that it may not be able to pay back its bondholders meant investors in Greek government debt were asking for a record 13% return on Thursday.

The Greek government needs to save 23bn euros (£20.3bn, $33bn) to lower its budget deficit from 10% to 1% by 2015.

It is expected to announce fresh privatisation plans and benefit cuts.

Rising interest payments on bonds – which are effectively IOUs – is an indication that investors are losing faith in the ability of the borrower to repay the debt.

The ability of the weaker eurozone countries to pay their debts is constantly being questioned by the markets

The record high rate of return reached on Thursday followed comments by the German finance minister Wolfgang Schaeuble that Greece may have to renegotiate its debt.

Later, the French finance minister Christine Lagarde told reporters that no talks were underway about restructuring Greece’s debt.

A Greek government spokesman, George Petalotis, told Reuters that the measures would send a message to markets: “Greece now has credibility, a plan and a prospect which guarantee that we will meet our targets.”

Greece received a 110bn euros bail-out from the European Union and the International Monetary Fund last year.

In order to qualify for that support it has to raise 50bn euros from privatisations by 2015, a target many analysts and Greek politicians see as optimistic.

The government is expected to provide broad outlines as to how it intends to achieve this and give more details before submitting them to parliament in May.

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