Seeking Alpha
May 17, 2011
European finance ministers approved an aid package for Portugal. Ireland is still seeking better terms. Although France's effective corporate tax rate is lower than Ireland's, Sarkozy is reportedly refusing to sanction some easier terms (lower rates extension of maturities on the aid package) unless Ireland makes a compromise on its taxes.
Greece's situation is far from clear. It is now appreciated that Greece will not be able to return to the capital markets as envisioned in last year's aid package. While something needs to be done, a consensus has not emerged, except that more effort on the part of Greece is necessary.
Last week the EC said this year's Greek deficit will be near 9.5% of GDP, rather than the 7.4% target. Last year's budget deficit was also larger than had been agreed upon. The IMF, EU and the ECB are currently in Greece evaluating the conditions and progress. A report is expected around mid-June, though there has been some indication that the report might not be ready for a week or so later.
Greece will have to prepare new proposals of reaching its deficit targets. To this end there is much talk about privatization. Greek officials are reportedly working on a 50 bln euro program, though the IMF indicated that this was "just" 20% of the property the government owns. No doubt Greece's creditors would like a more ambitious privatization program.
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