September 22, 2020

Rescue Aid to Greece Delayed as Pressure Rises for Reforms

Meeting in Luxembourg, the finance ministers made it clear that Greece was now unlikely to receive 8 billion euros ($10.6 billion) before November.

Greece has said it could default on its debt within weeks without the aid — an outcome with potentially disastrous consequences for the euro zone. But on Monday, finance ministers served notice that they intended to push Greece further.

“Full compliance with the agreed conditions is necessary for Greece to receive the funds Greece needs,” said Olli Rehn, the European commissioner for economic and monetary affairs. “A credible push for structural reforms and privatization are essential.”

“It is very likely there will need to be new measures,” Mr. Rehn added, although he said that those might be for aid to be given in 2012 since time was short.

Jean-Claude Juncker, president of the euro zone finance ministers, suggested that the issue of private sector involvement in a deal struck in July on Greek debt might be reopened. He said revisions were being discussed, but refused to say whether this could mean increased losses for private investors.

There was some good news with an agreement to allow Finland to receive collateral for loans to the Greeks, removing an obstacle to a second bailout for Greece agreed to in principle in July. No other nation is expected to request the same arrangements because of the conditions that make them costly, Mr. Juncker said.

Meanwhile Belgium’s finance minister, Didier Reynders, sought to calm fears about the fate of the Franco-Belgian financial group Dexia amid concerns about its exposure to Greek debt and reports that the bank could be broken up.

Dexia called an emergency board meeting late Monday after a 10 percent drop in its share price, and a warning from the credit agency Moody’s that Dexia’s main operating businesses were on review for a downgrade.

That highlighted the impact of the announcement from Athens on Sunday that Greece’s 2011 budget deficit was projected to be 8.5 percent of gross domestic product, down from a forecast of 10.5 percent last year but shy of the 7.6 percent target set by international lenders.

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.

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.”

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