Greek drivers fear fuel shortage; government prepares road show to reassure investors

By Elena Becatoros, AP
Monday, September 13, 2010

Motorists fill tanks ahead of Greek strike

ATHENS, Greece — Motorists rushed to gas stations as Greek truck drivers started a new wave of protests Monday, declaring a work stoppage and parking hundreds of vehicles along major highways in opposition to government plans to liberalize their profession.

Separately, the country’s finance minister was to head to major European financial capitals later in the week on a roadshow to reassure investors about the long-term prospects of Greece’s economy, which the government is overhauling to deal with a major debt crisis.

Opening up so-called closed professions, including notaries, pharmacists, architects and truck drivers is among the government’s top priorities. But unions have been fiercely opposed to those plans and the strict austerity measures introduced earlier this year, and have held six general strikes so far this year.

Motorists formed long lines at gas stations on Sunday and Monday, fearing a repetition of a weeklong strike in July that left pumps across the country dry for days. The government requisitioned fuel trucks to end that protest, and as truckers are still under the requisition order they cannot declare a strike. Instead, their union said they would organize daily protests.

State railway unions also called a 24-hour strike Tuesday to protest planned salary and personnel cuts as part of efforts to reform and partially privatize the money-losing rail network.

Faced with its worst financial crisis in decades, Greece now relies on a three-year euro110 billion ($140 billion) rescue loan package from the International Monetary Fund and other European Union countries that use the euro in order to avoid bankruptcy.

The country is receiving a euro9 billion ($11.45 billion) second tranche of the EU/IMF loans, with the EU’s euro6.5 billion (US$8.32 billion) portion disbursed Monday and the IMF’s contribution of euro2.5 billion (US$3.2 billion) due Tuesday, the Finance Ministry said.

In return, the country is overhauling its economy and implementing strict fiscal control, seeking to reduce the budget deficit from a massive 13.6 percent of annual output in 2009 to 8.1 percent this year. Its finances are under tight supervision from the IMF, ECB and EU, who carry out regular inspections to ensure it is meeting its targets. A delegation from the three agencies arrived in Athens Monday for a two-week visit to review Greece’s progress and its preparation of the 2011 budget.

Although the EU/IMF loans mean Greece doesn’t need to tap the market while it has the package, it has begun monthly issues of treasury bills to maintain a presence in the market.

But the government is eager to reassure investors that it is reforming its economy and is a safe investment. Finance Minister George Papaconstantinou embarks on a three-day roadshow Wednesday to London, Paris and Frankfurt with the head of the country’s debt management agency, Petros Christodoulou, and officials from the ECB, IMF and EU.

Papaconstantinou told the AP in an interview recently that investors were still waiting to see whether Greece could meet its targets by the end of 2010, and predicted a change in market sentiment early next year which would allow the country to “come back to the market sometime in 2011.”

The debt crisis broke out late last year when the newly elected Socialist government revised its deficit projection sharply upwards from 3.7 percent of GDP, and said the country’s statistics had been fudged by the outgoing Conservatives. The revelation of the size of Greece’s debts led to investors losing confidence in Greek bonds, sending the country’s borrowing rates skyrocketing to four times those of Germany’s — where they have remained more or less consistently.

The spreads, or interest rate difference, between Greek 10-year bonds and their benchmark German equivalents stood at more than 9 percent Monday, translating into an interest rate of about 11 percent.

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