News Column

Euro Praise for Greece, but Aid Still Iffy

Nov. 12, 2012
greek emblem

Eurozone finance ministers lavished praise on Greece for its austerity efforts on Monday, but were not expected to immediately approve the release of a bailout tranche that Athens need to avoid bankruptcy.

A debt sustainability analysis is still in the works, Finnish Finance Minister Jutta Urpilainen said, noting that ministers would "probably" meet again later this week - as Greece must refinance 5 billion euros (6.4 billion dollars) of maturing treasury bills on Friday.

"Greece has done an awful lot of work and has showed some real resolve, so it's now for the creditors to do the same," the managing director of the International Monetary Fund (IMF), Christine Lagarde, told journalists as she arrived for Monday's talks in Brussels.

French Finance Minister Pierre Moscovici said he would be pushing for the Eurogroup panel of ministers to at least deliver a "decisive" political agreement.

"Maybe we won't solve today all the problems - it's quite likely - but we have to move on and to get out of this meeting with a political agreement in order to make a decisive step," he said. "I think Greece deserves that, the Greek people deserve that."

Late Sunday, the Greek parliament had approved a 2013 budget that introduced additional spending cuts and tax hikes for the next two years - hot on the heels of separate budget-cutting measures approved in the southern European state.

"It is a good sign that, in Greece, a wide majority of lawmakers knows its responsibility - even in the light of understandable protests from the population," German Finance Minister Wolfgang Schaeuble said. "It shows an earnest will."

"They seem to be fulfilling all the conditions they were asked to fulfil, and I hope things will go well for them," Irish Finance Minister Michael Noonan added.

A long-awaited report by Greece's international lenders - the so-called troika of European Commission, European Central Bank and IMF - also strikes an upbeat tone, Eurogroup chairman Jean-Claude Juncker said on Monday morning.

"The troika report is fundamentally positive, because the Greeks have really delivered," Juncker noted.

But Greece's debt mountain continues to cause concern, with data released by the EU last week showing that it is on track to reach almost 190 per cent of gross domestic product (GDP) by 2014. Athens had been tasked with slashing it to 120 per cent of GDP by 2020.

A draft agreement prepared for Monday's meeting suggested that Greece be granted an additional two years to nurse its finances back to health given its "deeper-than-expected economic recession," according to a copy seen by dpa.

The draft memorandum of understanding said that, unless a 2016 deadline is set, Athens would need to find 20.7 billion euros (26.3 billion dollars) in cuts for 2013-2014, instead of the 11.5 billion euros originally planned.

"The extension of the adjustment period should not be seen as a way to reduce the effort," the draft said. "The deeper recession means that the adjustment effort is equally strong."

But "more time also costs more money," Austrian Finance Minister Maria Fekter warned, expressing doubts that politicians would be ready to ask their taxpayers for additional funds to help Greece.

Source: Copyright 2012 dpa Deutsche Presse-Agentur GmbH

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