Fitch warns Greece's financial troubles will worsen eurozone crisis

PanARMENIAN.Net - 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 percent 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.

Greece's development minister says the debt-crippled country's budget deficit is expected to hit 9.6 percent of economic output in 2011, about half a percentage point above target.

Michalis Chryssochoidis said Wednesday, Jan 11, that an increase in use of European Union structural development funds had contributed to lowering government overspending from 10.6 percent in 2010, The Associated Press reported.

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