Business

Greece to privatise 50bn euros of state assets

Greek presidential guards
Image caption The privatisation plan is designed to bolster confidence in Greek economic strength

Greece has announced plans to sell 50bn euros (£44bn; $72bn) of state assets in a bid to get its finances back on track.

Government stakes in the utility power company PPC, the telecom operator OTE and ATEbank will be sold off by 2015.

The government's mid-term budget plan also aims to save 3bn euros, of which 2bn euros will come from cutting tax breaks.

The moves will help it meet conditions of its 115bn euros bail-out.

A document released by Prime Minister George Papandreou's office stated: "The size of the fiscal adjustment that needs to be achieved by our country in 2012-15 is about 23bn euros, or about 10% of GDP [gross domestic product]."

The finance minister, George Papaconstantinou, said the cuts would keep the country within its targets.

More details of its budget plans will be revealed after Easter, which falls on 24 April, to try to steady investors' faith in its solvency.

Mr Papaconstantinou said: "The plan will be completed in the coming weeks. It will be then submitted to parliament. We are all determined to change our country in every possible way."

He said the mid-term fiscal package would be designed to cut spending to 44% of gross domestic product by 2015.

The country's creditworthiness has again come into question this week.

Record

Talk that it may not be able to pay back its bondholders meant that Greek government debt has been trading at record yields of more than 13%.

A rise in the yield - or rate of return - 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.

But on Friday, Mr Schaeuble said his comments had been "somewhat erroneously" interpreted by English-language media.

Also on Friday, Jean-Claude Juncker, the chairman of the eurozone finance ministers, said speculation concerning a restructuring of Greek debt was "totally unfounded".

"This is not even an option," he told reporters.

Greece received a bail-out worth 110bn euros 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.

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