Greece Replaces Head of Debt Management Agency

Greece has replaced the head of its debt management agency, the Foreign Ministry said, just as the country finds itself in the spotlight for allegedly hiding the size of its debt problem.

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The news that Petros Christodoulou, former head of asset management at the National Bank of Greece, will take over from Spyros Papanicolaou comes as financial markets worry that Greece may default on its mounting load of public debt.

The Finance Ministry did not give a reason for the appointment in its announcement late Thursday, but changes at the head of the agency often come after a change in government. The Socialists came to power after early elections held last October.

Greece has taken a hammering in markets in recent months, after the new government sharply revised the budget deficit shortly after the elections to 12.7 percent of gross domestic product from a 3.7 percent forecast months earlier -- sending Europe into a new phase of the financial crisis over mounting debts by Greece and several other euro-zone countries.

Spreads of Greek government bonds over the equivalent German benchmark bonds -- a key indicator of the market's perception of a risk of default -- have spiraled in recent weeks, and stood at 326 basis points on Friday afternoon.

Athens has come under intense pressure by its European Union partners to bring its finances under control and explain the use of financial deals known as currency swaps and how they affected the country's debt and deficit figures.

Greece has announced a series of harsh austerity measures and says the swaps debt deal, made with U.S. investment bank Goldman Sachs, was above board and will be explained in a letter being sent by the finance minister to the European Union.

The EU's top economy official, Olli Rehn, gave the Greek government until Friday to supply answers on the use of the currency swaps.

"There will be a response. There is a letter by the Finance Minister," government spokesman Giorgos Petalotis said, adding it would "most likely" be sent on Friday.