Sign up to The Irish Times Archive (1859 - 2008)My Account »

THE GREEK government needs to raise about €53 billion this year to refinance existing sovereign debt and to pay for new borrowing to bridge its huge budget deficit. A default on loan repayments by Greece would not just undermine the credibility of the euro but would mean that other euro zone member states with similar budgetary difficulties - Portugal, Spain and Ireland – would face the risk of contagion.

That would further depress the value of the euro, which has fallen by about 9 per cent since December, and raise major doubts about the future of the single currency. The European Union took a tentative step yesterday towards ensuring that malign scenario does not unfold. But it may have to take further and much greater action in the months ahead.