News Column

Eurozone Ministers Optimistic on Striking Greek Aid, Debt Deal

November 26, 2012

Eurozone finance ministers said Monday they were within "centimetres" of a deal that would allow the release of a new tranche of aid for Greece.

But it remained to be seen whether they would be able to win over the International Monetary Fund (IMF).

"I want to encourage all the euro area member states and the IMF to go the last mile in order to find an agreement - in fact, go the last centimetres because we're so close," EU Economy Commissioner Olli Rehn said as the ministers gathered in Brussels.

It is the fourth time in three weeks that they are holding talks on Greece, along with the other members of the country's so-called troika of creditors - the IMF and the European Central Bank.

"It's essential to take the decision on the disbursement of the next tranche in order to end the uncertainty that's still hanging over Greece," Rehn said. "I plead to everybody that they will now find the necessary political goodwill to strike a deal."

French Finance Minister Pierre Moscovici estimated that the Eurogroup had covered "95 per cent" of the way to an agreement, as he called for all parties to be "reasonable" and "live up to their responsibilities."

There is broad agreement that Athens has fulfilled the preconditions for the 31.5-billion-euro (40.9-billion-dollar) tranche to be disbursed. But disagreements have emerged about how to fix its financial woes over the long term.

The ministers are working under the concept of "nothing is agreed until everything is agreed," Rehn noted.

A major issue to be settled is how to bridge a 32.6-billion-euro gap in Greece's bailout, created after the ministers agreed to give the country two extra years to get its finances back into shape.

A disagreement has also emerged between the IMF and the Europeans on whether Athens should have until 2020 or 2022 to cut its debt down to 120 per cent of gross domestic product (GDP) - given the fact that it is now expected to balloon to almost 190 per cent next year.

IMF Managing Director Christine Lagarde said ahead of Monday's talks that she would be working for "a solution that will be credible for Greece."

Options on the table include cutting Athens' interest rate, extending the duration of its loans and carrying out a debt buyback programme.

Germany's Wolfgang Schaeuble on Monday vigorously ruled out the possibility of governments restructuring their Greek debt as part of a further haircut, noting that all ministers have ruled out such a step because of "national laws."

He nevertheless expressed optimism that a solution would be found.

Athens has been upping the pressure on the ministers to deliver, arguing that it did its part by passing a new package of salary decreases, pension cuts and tax hikes totaling 13.5 billion euros.

"I'm sure that we will find a mutually beneficial solution today," Greek Finance Minister Yannis Stournaras told reporters in Brussels.

Source: Copyright 2012 dpa Deutsche Presse-Agentur GmbH

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