Greek deal doesn't end EU worries: Norway bank

AFP - [email protected]

The European Union is not yet out of the woods despite the adoption of a €237-billion ($310 billion) Greek bailout plan, the head of Norway's central bank warned on Tuesday.


"There has been some positive news but of course so far in Europe the debt has not ... disappeared. They're shuffling the debt around. They're discussing who is going to take how much of the bill," central bank governor Øystein Olsen told reporters in Oslo.

"We should perhaps be relatively optimistic but I am not quite sure that we have seen the last round of unrest in Europe," he added.

Olsen noted several positive signals in recent weeks, such as a gradual recovery in the United States and European Central Bank loans to improve liquidity, but said "the problems have not disappeared clearly.

"We read of problems of managing Greek debt and indebtedness as such every day ... I think it's too early to say that the danger is over," he said, but still qualifying the deal with Greece on Tuesday as "a positive step."

The rescue plan provides up to €130 billion in direct aid in return for conditions being met. It follows a first bailout in May 2010 worth €110 billion which proved not to be enough.

The bailout also depends on bond-holders agreeing to wipe 53.5 percent off the paper value of privately-held Greek sovereign debt, or the equivalent of €107 billion.

Oil-rich Norway, which is not a member of the European Union, has weathered the crisis relatively unharmed, although part of its manufacturing sector has been hit by a slowdown in exports to Europe.


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