Finland's nationalist True Finns party which opposes the bailout of struggling EU countries, including Ireland, made big gains in the general election that was held on Sunday. Meanwhile The Wall Street Journal reports that the IMF (International Monetary Fund) is believed to support restructuring of Greek debt.
The centre-right National Coalition Party (NCP), which is the junior partner in the outgoing government and advocates a pro-euro line, will be the biggest party in the new Finnish parliament after winning 44 out of 200 seats with a 20.4% share of the vote. However, the True Finns saw their number of seats rise from 6 to 39 on a 19% share.
The Centre Party of Mari Kiviniemi, the outgoing prime minister, lost 15 seats, party attributed to a funding scandal and it took 15.8% of votes.
The Social Democratic party (SPD) which had voted against the Greek and Irish rescue packages, got 19.1% of the vote and it won 42 seats.
Jyrki Katainen, NCP's leader and finance minister, is expected to be asked to try and form a government.
The bailout package for Portugal will have to win the support of the majority of the Finnish parliament and as unanimity will be required in Brussels, the election adds further uncertainty to the Eurozone's sovereign debt crisis.
The result is consistent with anti-bailout sentiment in Germany, France, the Netherlands and Austria.
True Finns Party's charismatic leader Timo Soini
told Finnish broadcaster, YLE, that he expects post-election government
formation talks to be "very interesting." And, while he was still
awaiting final results, Soini added, "They may be difficult, too." He did
say, however, that the True Finns will be aiming at a place in government.
The Wall Street Journal reports that the International Monetary Fund believes Greece's debt is unsustainable and has told European government and central bank officials that Athens should consider restructuring by next year, three people familiar with the situation said Saturday.
"The IMF believes the debt situation in
Greece is unsustainable," one of those people, who has
direct knowledge of the matter, told Dow Jones Newswires. "Senior [IMF]
officials have told the parties involved that restructuring should be considered
soon," including the European Commission and euro-zone governments, this
The Economist says calculations by the Bank of England on losses that would arise from haircuts to Greek, Irish, Portuguese and Spanish debt suggests that a 50% haircut would wipe out 70% of the equity in Greek banks, almost half of it in Portuguese and Spanish banks and about 10% of the equity in German and French banks.
The newspaper adds that German banks are owed twice as much by banks in the three bailed-out countries as they are by governments. Once corporate loans and other exposures are included, Germany’s vulnerability is clear: its banks are owed some €230bn.
Zsolt Darvas of Bruegel says:"Restructuring is not a free lunch – far from it. It always has to be paid for in various ways. For example, if a country gives its creditors 'haircuts' by refusing to pay them back in full as part of the restructuring, it should also seek to ensure that they stand to benefit and even recoup some of their losses if the restructuring leads to an economic revival."
© Copyright 2011 by Finfacts.com