EU Officials Reject Greek Claims of Bailout Extension
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Greece’s finance minister said on Wednesday that debt-stricken Athens has been given more time to meet its bailout targets. However, officials from the ECB and IMF have refuted the claims, saying a decision will only be made after the troika releases it assessment report on the Greek economy.
Addressing the Greek Parliament on Wednesday, finance minister Yannis Stournaras said Greece’s European partners have agreed to give Athens additional time to carry out its austerity programme.
Stournaras told parliament:
Greece’s finance minister said on Wednesday that debt-stricken Athens has been given more time to meet its bailout targets. However, officials from the ECB and IMF have refuted the claims, saying a decision will only be made after the troika releases it assessment report on the Greek economy.
Addressing the Greek Parliament on Wednesday, finance minister Yannis Stournaras said Greece’s European partners have agreed to give Athens additional time to carry out its austerity programme.
Stournaras told parliament:
[quote] Today, what have we achieved? We have achieved the loan extension. After an all-night effort, the troika also backed down on two main issues – severance payments and the notice period required before a layoff … To a great extent, the negotiations have been completed. But even now, we are trying for improvements. [/quote]
Earlier this month, Reuters cited a draft agreement between Greece and the troika that specified Athens will have until the end 2016 instead of 2014 to meet a targeted budget surplus of 4.5 percent, before taking into account interest payments on its national debt.
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The deal would relieve some pressure from Greece’s economy, which is heading for its sixth consecutive year of recession.
Stournaras’ claims, however, were played down by European officials.
Europe’s paymaster Germany said the EU would only decide on the matter after receiving a report on Greece’s progress from the troika while ECB President Mario Draghi said no final decision had been made.
Speaking to reporters in Berlin, Draghi said:
[quote] The [latest Greek] review is not yet finished. I understand progress has been made, but some parts need to be defined, and I don’t know anything more than that. [/quote]
A decision on the extension – and more importantly how to finance the delay – will be made with eurozone finance ministers who are expected to decide next month whether to disburse a 31 billion euros ($40 billion) aid instalment under an existing 173 billion euros bailout agreement.
With state coffers virtually empty, an economy near depression and unemployment at a record high of 25 percent, Stournaras says the money is needed for Greece to avoid bankruptcy.
Greece also needs to pay off a portion of more than 8 billion euros in arrears that it owes suppliers for basic products, like medicines, that some companies have stopped supplying to Greece until they are paid.
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However, most of the money will not be put directly back into the economy but will instead be used to recapitalise Greece’s shaky banking system. Capital reserves were depleted earlier this year after banks incurred massive losses when the government forced private sector creditors to take a 50 percent loss on Greek bonds.
