September 30, 2022

Euro Zone Finance Ministers Press Greece to Meet Aid Targets

The most immediate issue facing the ministers, who are meeting in Luxembourg, is the disbursement of an €8 billion, or $10.6 billion, installment of aid, without which Greece could default on its debt within weeks — an outcome with potentially disastrous consequences for the euro zone.

The meeting Monday had originally been scheduled to approve the disbursement, part of a €110 billion rescue program for Greece agreed to in May 2010. But continuing doubts about Greece’s ability to push through harsh structural changes have led to tense discussions with officials from the so-called troika of international lenders — the European Commission, the European Central Bank and the International Monetary Fund.

Representatives of those institutions, now visiting Athens, have yet to make a recommendation to release the money, and no decision is expected this week.

“What we want the Greeks to do is what they said they were going to do,” said one euro zone diplomat in Luxembourg, who was not authorized to speak publicly.

The finance ministers also discussed expanding the firepower of the currency’s rescue fund by leveraging the €440 billion zone bailout fund. Finland’s demand for collateral in exchange for loans to Greece, which is another obstacle to a resolution of the crisis, was also on the agenda.

Athens announced Sunday that its 2011 budget deficit was projected to be 8.5 percent of gross domestic product, down from a projected 10.5 percent last year but shy of the 7.6 percent target set by international lenders.

The government, which on Sunday also adopted a draft austerity budget for 2012, attributed the gap to the deepening economic downturn but said it was on course to improve its public finances.

Evangelos Venizelos, the Greek finance Minister, said his country was taking “all the necessary difficult measures in order to fulfill its obligations towards its institutional partners.”

“The new budget, the budget for the new year, is very ambitious,” he added. “Our target is to present for the first time, after many years, a primary surplus of €3.2 billion.”

Elena Salgado, the Spanish finance minister, said Monday that she supported the idea of leveraging the euro bailout fund, the European Financial Stability Facility. She said she was not advocating a larger fund, but “more flexibility and more capacity.” That message was echoed Monday by George Osborne, the British chancellor of the Exchequer. “The euro zone’s financial fund needs maximum firepower,” Mr. Osborne said at a Conservative Party conference in Manchester.

“The euro zone needs to strengthen its banks,” he said. “And the euro zone needs to end all the speculation, decide what they’re going to do with Greece, and then stick to that decision.”

“The time to resolve the crisis is now,” Mr. Osborne continued. He is due to join the other European finance ministers in Luxembourg on Tuesday. “They’ve got to get out and fix their roof, even though it’s already pouring with rain.”

Article source: http://www.nytimes.com/2011/10/04/business/global/euro-zone-finance-ministers-press-greece-to-meet-aid-targets.html?partner=rss&emc=rss

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