Greece

Greece is seeking extra money from its international creditors to cover a coming bond redemption in late August, as a deeper-than-expected recession drives the country's fiscal-consolidation program off course for 2012, The Wall Street Journal reported. With Athens hoping to avoid introducing additional cutbacks for this year, which would further weigh down economic activity, the government is putting together a plan to save €11.5 billion ($14 billion) over the next two years in line with demands from international creditors.

Greece’s coalition government has stripped the bosses of the lossmaking state electricity producer of a monthly €3,500 allowance paid on top of their salaries, in a move signalling their intention to slash wasteful spending in the public sector, the Financial Times reported. The “family” allowances, deemed illegal in a recent high court ruling, have highlighted continuing public sector resistance to change, despite Greece’s economic situation. Affected in this case were Arthuros Zervos, the chief executive of Public Power Corporation, and Costas Theios, his deputy.

Greece's three-party coalition government will try to get the economy out of its deep recession by encouraging private investment and making privatizations its "highest priority," finance minister Yannis Stournaras said Saturday, the Associated Press reported. "The privatization program aims at attracting important international capital that will be invested mainly in property development and infrastructure," Stournaras told parliament on the second day of the debate on the new government's policy platform.

Greece’s new government has dropped a plan to seek softer terms for its second bailout following warnings that it would be rejected by international lenders, the Financial Times reported. Yannis Stournaras, finance minister, said the governing coalition would have to accelerate reforms before asking for modifications in a €174bn programme agreed in February with the European Union and the International Monetary Fund. “The programme is off-track and we can’t ask for anything from our creditors before we get it back on course,” Mr Stournaras told the Financial Times.

Greek Finance Minister Vassilis Rapanos has resigned for health reasons, the prime minister's office said Monday, forcing the government to scramble to find a replacement to lead efforts to renegotiate better terms for Greece's European-led bailout, The Wall Street Journal reported. Mr. Rapanos, 64 years old, has been hospitalized since Friday suffering from severe abdominal pains, and decided not to head the finance ministry as part of the coalition government that emerged from elections held earlier this month.

After sputtering through four years of recession, most commercial activity has all but ceased over the past six weeks as the country endured two nail-biting elections with its future in the eurozone hanging in the balance, the Financial Times reported. The political paralysis has both quickened the outflow of deposits from Greece’s teetering banks and put on hold an EU-funded effort to recapitalise them. Business leaders say they can no longer obtain the most basic credit – even when they boast solid order books.

Greece appears headed for a new clash with Germany over its rigid bailout program as the winners of Sunday's Greek election prepare to ask Europe for more time to cut public spending, The Wall Street Journal reported. Greece's conservative New Democracy party and its likely Socialist coalition partner, known as Pasok, are working on a proposal to ask other euro-zone countries for an extra two years to meet Greece's fiscal targets, officials involved in the preparations said.

The results of the Greek elections are in: New Democracy, the conservative “pro-bailout” party, has come in first and appears to have enough support to form a new government, The Washington Post Wonkblog reported. So what does this mean? In the very short term, it likely means Greece won’t be leaving the euro zone. New Democracy’s leader, Antonis Samaras, basically wants to abide by the terms of the country’s bailout agreement with the rest of Europe. Greece will continue to stick with its austerity program — spending cuts, tax hikes, paring back public-sector jobs.

Crédit Agricole SA is making contingency plans to abandon its Greek bank or merge it with a conglomerate of domestic banks in the event of Greece leaving the euro zone, according to a person with direct knowledge of the plans, The Wall Street Journal reported. The admission offers the starkest evidence yet of international companies preparing for the worst in Greece, just days ahead of elections that could set it on a path to leave the currency union.

Massive Spain was forced to ask for a bailout to keep its banks afloat this weekend. But it was tiny Greece that pushed Spain over the brink, The Washington Post reported. This Mediterranean nation’s 11 million people head to the polls next Sunday with a stark choice between leaders who accept the harsh terms of the bailouts that have kept their country afloat and those who reject them, potentially at the cost of Greece’s future on the euro. Fears that a Greek rejection would panic markets about the euro zone’s future pushed Spain to seek the aid ahead of Greece’s election.