FITCH ON GREECE: ‘Time Is Running Out’

Greece Strikes Austerity

[credit provider=”AP”]

FRANKFURT, Germany (AP) — Fitch Ratings warns that Greece’s financial troubles could still worsen the eurozone crisis if it can’t work out a debt reduction deal with creditors.Fitch’s head of sovereign ratings David Riley said Greece “still has lots of potential to plunge Europe into crisis” and that “time is running out.”

Greece is in talks with private investors about a voluntary 50 per cent reduction in their Greek bond holdings before euro14 billion in bonds come due in March. A deal would be part of securing a second, euro130 billion bailout.

Riley said one complicating factor was the European Central Bank’s refusal to write down its estimated euro45 billion in Greek bonds. That means private bondholders have to be asked to take on more losses to reach a given reduction in debt.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

LAGONISSI, Greece (AP) — Greece’s development minister says the debt-crippled country’s budget deficit is expected to hit 9.6 per cent of economic output in 2011, about half a percentage point above target.

Michalis Chryssochoidis said Wednesday that an increase in use of European Union structural development funds had contributed to lowering government overspending from 10.6 per cent in 2010.

It will not be enough, however, to get it down to the 2011 target of 9 per cent of GDP.

Greece is relying on billions in rescue loans from its European partners and the International Monetary Fund to keep afloat.

Chryssochoidis spoke at an economic forum where the government hopes to attract investment from the United Arab Emirates.