EU to discuss Greek aid, no firm figures seen
BRUSSELS (Reuters) - Euro zone finance ministers are expected to agree a way of providing Greece with financial aid to tackle its debts on Monday, but France warned not to expect any hard figures and there remained barriers to a deal.
The 16 countries that use the euro single currency have provided strong verbal and political support to Greece since its debt and deficit problems exploded three months ago, but have not agreed on the need for a package of financial aid.
Germany, Europe's biggest economy and the country that would be the linchpin of any financial support, is reluctant to bail out Greece, saying the country's priority must be to get its own finances in order and make deep structural adjustments.
The 16 finance ministers are scheduled to gather in Brussels for the meeting from around 1700 (11:00 a.m. ET).
Greece this month unveiled a new set of austerity measures, including cutting public sector pay and raising taxes, and a poll on Sunday showed most Greeks saw that as a step in the right direction, despite the street protests they have provoked.
But in order to further insulate Greece against financial market pressures and the threat of default, which have dented the value of the euro, finance ministers are expected to assess the possibility of providing Greece with financial support.
A senior EU source told Reuters at the weekend that among the means under consideration were bilateral loans and loan guarantees, although no value has been put on the support.
Under EU rules, neither the bloc as a whole nor individual member states can assume the debts of other countries, but loan guarantees would circumvent those restrictions.
French Economy Minister Christine Lagarde said she did not expect any figure for aid to be announced at Monday's monthly meeting of the Eurogroup finance ministers in Brussels.
"I'm certainly not expecting any decision being made, or any button being pressed, or any button being selected to be pressed, because it's totally premature," she told reporters.
Despite that, she said Greece had "delivered enormously" with its austerity steps which include promised spending cuts equal to 2 percent of gross domestic product.
Germany, whose banks are among the largest owners of Greek sovereign debt, said Athens was taking the right steps to deal with the crisis and said no deal on financial aid was needed.
"The Greek government deserves great respect for its savings efforts," Finance Minister Wolfgang Schaeuble told the German newspaper Bild. "But there are no new factors. Therefore, there is no reason to take decisions on financial aid on Monday."
On Saturday, Britain's Guardian newspaper quoted sources as saying Monday's meeting would agree to make up to 25 billion euros of support available.
NO SPECIFIC NUMBERS
The senior EU source told Reuters no figures were likely at this stage and played down the focus on specifics.
"I think we should be able to agree on principles of a euro area facility for coordinated assistance. The (executive) European Commission and the Eurogroup task force would have the mandate to finalize the work," the source said.
He said they would discuss the principles and parameters of a facility or mechanism that could be activated if needed and requested, but no figure had been agreed.
"You would have a framework mechanism and you would have blank spaces for the numbers because there has been no request (from Greece) yet," the source said.
Greece hopes to reduce its budget deficit this year to 8.7 percent of GDP from 12.7 percent in 2009, a plan that has led to protests and strikes.
But just over half the 1,008 people surveyed for the Greek newspaper Ethnows said last week's 4.8 billion euro ($6.6 billion) package went in "the right direction," while 41.9 said it did not. Many said unions should tone down their opposition.
The austerity plan has reduced market concern over whether Greece will be able to service its debt and helped Athens sell its bonds with ease on debt markets earlier this month.
But policymakers are still searching for ways of making its cost of borrowing -- still far above that of other European and eurozone countries -- more sustainable.
They are also concerned that the problems in Greece could further undermine confidence in the euro and spread to other heavily indebted euro zone countries such as Portugal or Spain.
Discussing reforms needed to shore up the group's rules, Schaeuble reiterated that it should eventually be made possible, in extreme cases, for a state to leave the euro zone if it fails to manage its finances.
"We need tighter rules," he said. "That means in an extreme case, the possibility that a country that does not get its finances in order at all leaves the euro group. Such a prospect alone would ensure a totally different kind of discipline."
(Editing by Patrick Graham)
No comments:
Post a Comment