ATHENS, Greece (AP) – The government of debt-ridden Greece said it had struck a preliminary deal to pay off billions owed to drug and medical suppliers, ending a standoff that caused severe shortages at state hospitals and forced operations to be suspended.
Finance Minister George Papaconstantinou said a meeting with suppliers “led to an agreement in principle” regarding payment of €5.7 billion ($7 billion) in debts accrued since 2005. He said he expected companies to resume suspended supplies immediately.
Doctors say the dispute has caused a lack of vital materials at state hospitals, including drugs, and orthopedic and microbiologic equipment, and some hospitals even faced difficulties with food supplies. They stressed that patients’ lives were not immediately at risk.
The head of an association representing Greek kidney patients warned that protracted delays in supplies might endanger 5,500 people undergoing dialysis at public hospitals.
“Currently, stocks should last for about a week, but any delay could set lives at risk,” Giorgos Kastrinakis said.
Greece is in the throes of a debt crisis and narrowly avoided bankruptcy last month using the first installment of a €110 billion €pean Union and International Monetary Fund bailout. The country is under tight EU and IMF supervision, with a team of inspectors in Athens this week to review implementation of painful spending cuts made to secure the rescue loans.
Hospital loans contributed significantly to the exacerbation of Greece’s budget deficit, which soared last year to 13.6 percent of annual output. The center-left government has pledged to cut budget overspending to 2.6 percent of gross domestic product in 2014.
Papaconstantinou said hospital suppliers – 500 companies – would get €350 million ($429 million) in cash, and the rest through interest-free government bonds with a duration of up to three years. He said the government has already paid off €1.2 billion ($14.7 billion) in cash, mainly for debts from 2005 and 2006.
The announcement came a day after international agency Moody’s Investors Service slashed its rating for Greek government bonds to junk status due to risks associated with the EU and IMF rescue package.
The downgrade reflects concern the country could fail to meet its obligations to cut its deficit and pay down its debt.
Prime Minister George Papandreou said the downgrade was “unjustifiable,” adding that deficit cuts so far are well on target, at around 40 percent.
“It is extremely important to stay dedicated to meeting our commitments,” Papandreou said. “Our target is to attain a viable economy. So that one never even has to think of new sacrifices again, and not only that but so we can also replace what the Greek people have lost.”
Government spokesman George Petalotis said the downgrade was “odd, to say the least.”
“There was no sense or reason in this downgrade,” Petalotis said.
On Tuesday, Moody’s also downgraded Greek lenders National Bank of Greece, EFG €bank Ergasias, Alpha, Agricultural Bank of Greece, Emporiki and General.
Date: June 15, 2010
Source: Associated Press
Filed Under: Drug Discovery