E.U. finance ministers have given Greece two additional years,
even though the decision will require extra funding.
Finance ministers from euro zone countries meeting here late
Monday praised overhauls made by Greece and gave the country two
more years to make budget cuts, a concession that is expected to
require additional funding of nearly EUR 33 billion.
But the ministers put off until Nov. 20 any decision to give
Greece a long-delayed payment worth EUR 31.5 billion, or $40
billion, so international officials and national parliaments could
continue to assess the steps that the government in Athens had
agreed to make as a condition of two bailout packages totaling EUR
240 billion.
In a sign that fixing the Greek economy and the euro would
continue to be a rancorous process, even after three years of
crisis, Jean-Claude Juncker, the prime minister of Luxembourg, and
Christine Lagarde, the managing director of the International
Monetary Fund, publicly disagreed on how long to give Greece to make
its debts sustainable into the next decade.
Mr. Juncker told reporters at a late-night news conference that
Greece should now be given until 2022 to cut its debt to 120 percent
of its gross domestic product. But Ms. Lagarde immediately met that
assertion with incredulity, saying there was an urgent need for
steps to be taken sooner to ensure that the country's high external
financing needs would be viable in the future.
"The appropriate timetable is 120 percent by 2020," said Ms.
Lagarde, who shook her head and rolled her eyes at Mr. Juncker's
comments. "We clearly have different views," she said, adding that
keeping to that goal was vital "so that that country can be back on
its feet and reaccess the private market in due course."
Speaking later in the news conference, Mr. Juncker insisted that
his comment had not been "a joke."
Ms. Lagarde also was more cautious in her praise of progress made
by the Greek authorities than euro area officials, including Mr.
Juncker.
"From the I.M.F.'s point of view, it's critical that all chapters
of the book be not only opened, but closed satisfactorily -- that
means the fiscal commitments, the structural reforms, the financing
and the debt sustainability analysis, which we will clearly come
back to with additional work to be done in coming days," Ms. Lagarde
said.
Last week, Greece's shaky coalition won a tight vote on a package
of austerity measures and fiscal overhauls totaling EUR 17 billion
for the next four years.
Then, early Monday, the Greek government pushed through
Parliament a tough budget for 2013 that calls for cuts totaling EUR
9.4 billion to salaries, pensions and social benefits and that
raised the retirement age to 67 from 65 and imposed higher taxes.
Those steps were a sign that "words have been backed by deeds,"
Olli I. Rehn, the E.U. commissioner for economic and monetary union,
told the same news conference.
"It is time to debunk the perception that no progress has been
made," said Mr. Rehn, referring to the structural changes made by
Greece. "This perception is damaging, it is unfair, and it is simply
wrong." Mr. Rehn gave as examples the way Greece had overhauled the
disbursement of medicines and adjusted its pension system.
Failure to disburse the pending loan installment to Greece could
result in a chaotic exit from the euro and threaten the currency.
But obstacles to releasing that money remain. Even when ministers
do give the green light for that disbursement, the decision remains
subject to approval by a number of national parliaments.
Mr. Juncker said checking that those parliamentary approvals had
been made could require finance ministers to hold a teleconference
or meet in person at the end of the month, in addition to their Nov.
20 meeting.
Wolfgang Schauble, the German finance official, said earlier
Monday, "Seriously, thoroughness is a must, and before we decide,
Germany's Bundestag has to be involved, just like in other
countries."
In Greece, promised overhauls and budget cuts went off track in
recent months, partly as a result of two elections in three months
earlier this year. That left the government in Athens seeking more
time to make changes.
Yet relaxing the terms of agreement with Greece will cost more
money for lenders and put leaders of big creditors like Germany in
an awkward position with voters who have grown tired of bailing out
others.
A draft copy of a report by the troika of Greece's major
creditors -- the European Commission, the European Central Bank and
the International Monetary Fund -- that was circulating at the
meeting said the bill for allowing Greece the additional time would
be EUR 32.6 billion.
Addressing Greek lawmakers before the vote on the budget, Prime
Minister Antonis Samaras said the new cuts would be the last, and he
appealed to the troika to support his country.
"Greece has done its part," Mr. Samaras said. "Now it's the turn
of the lenders."
