[ti:Greek Lawmakers Pass Spending Cuts Required for Loans]
[ar: Jim Tedder]
[al:Economics Report]
[by:www.21voa.com]
[00:00.00]This is the VOA Special English 
[00:03.02]Economics Report.
[00:04.76]Greece's debt crisis 
[00:06.69]has shaken investors 
[00:08.68]in the United States and worldwide. 
[00:11.98]They worry that it could spread 
[00:14.84]far beyond Greece.
[00:16.51]On Thursday, a day 
[00:19.44]after huge protests in Athens, 
[00:22.24]the Greek parliament approved 
[00:24.60]a series of spending cuts.
[00:26.53]Greece has to cut thirty billion 
[00:29.95]dollars as part of a bailout deal 
[00:33.19]with the European Union 
[00:34.87]and the International Monetary Fund. 
[00:38.72]The deal is for one hundred forty-five 
[00:42.08]billion dollars in loans.
[00:45.13]The cuts include wage freezes 
[00:48.49]and reductions in retirement 
[00:51.10]pay for government workers. 
[00:53.59]A new requirement raises 
[00:56.14]the retirement age for women 
[00:58.50]from sixty to sixty-five.
[01:01.55]Critics say the austerity plan 
[01:04.97]will hurt the poor especially. 
[01:06.90]But Greek labor costs are high 
[01:10.57]even for Europe. 
[01:12.69]And Greece's public debt is equal 
[01:15.98]to at least one hundred fifteen 
[01:18.10]percent of its economy. 
[01:20.03]The cuts may be the only hope 
[01:23.14]to avoid declaring bankruptcy.
[01:26.18]Sebastien Galy 
[01:28.36]is senior currency strategist 
[01:31.04]for the French bank BNP Paribas. 
[01:34.89]He says other European countries 
[01:38.31]delayed rescuing Greece because 
[01:41.67]it was politically unpopular. 
[01:44.10]Now they are paying for it.
[01:47.09]SEBASTIEN GALY: "They certainly lost 
[01:48.20]an opportunity that we had in January 
[01:50.69]where it would have cost roughly 
[01:52.75]sixty billion euros to save Greece."
[01:55.23]On Sunday, European countries promised 
[01:58.03]to make eighty billion euros in loans 
[02:01.14]available over the next three years. 
[02:03.38]The International Monetary Fund 
[02:06.99]promised thirty billion.
[02:08.79]The quality of Greek government debt 
[02:12.09]is now rated at "junk" levels. 
[02:14.77]The high risk has investors 
[02:18.00]demanding higher interest rates, 
[02:20.67]and not only on Greek debt.
[02:23.47]Portugal and Spain have also had 
[02:27.39]their credit ratings reduced. 
[02:29.13]Both borrowed from credit markets 
[02:32.24]in the last few days. 
[02:33.99]And both had to pay far higher 
[02:37.16]rates than Germany, 
[02:38.78]the safest investment 
[02:40.64]in the euro area.
[02:43.01]The euro is eleven years old 
[02:45.93]and used as the currency 
[02:48.36]of sixteen countries. 
[02:50.10]But less trust in the euro 
[02:52.90]has reduced its value 
[02:54.89]to the lowest levels in over a year.
[02:58.81]Sebastien Galy says growth expectations 
[03:03.41]for the euro area have dropped. 
[03:05.65]This has affected producers 
[03:08.39]of raw materials such as 
[03:10.87]Australia, Brazil and Canada.
[03:13.61]But he says the falling euro 
[03:16.72]should help ease the crisis. 
[03:18.96]He expects the exchange rate 
[03:21.95]against the dollar to reach 
[03:23.94]one-to-one within a year. 
[03:26.05]That would be good news 
[03:28.91]for European countries 
[03:30.34]with heavy debt loads.
[03:32.83]SEBASTIEN GALY: "The lower the euro is, 
[03:34.64]the more competitive these economies 
[03:36.75]become and, therefore, the more 
[03:38.55]the fiscal concerns are going 
[03:39.74]to be reduced."
[03:40.67]While the euro has fallen, 
[03:42.10]the dollar has gained value. 
[03:44.22]Investors fleeing risk have bought 
[03:47.76]dollars and American debt.
[03:50.13]And that's the VOA Special English 
[03:52.99]Economics Report, 
[03:54.54]written by Mario Ritter. 
[03:56.84]I'm Jim Tedder.