Eurozone to meet again on Greek aid, clashes with IMF
BRUSSELS, Belgium - Eurozone finance ministers agreed Monday, November 12, to meet again November 20 to clear the way for a long-delayed Greek aid payment, but a proposal to change its debt reduction deadline sparked the ire of the International Monetary Fund.
Eurogroup head Jean-Claude Juncker said Greece has made progress on its commitments to reduce debt and the public deficit but ministers still had work to do before finalising the details and so approving some 31 billion euros ($39 billion) in funding.
Greek Prime Minister Antonis Samaras had said his country would go broke by Friday if Monday's meeting failed to produce the aid payment, but Juncker said there would be no problem with Athens rolling over debt due on that day.
"I will do all I can to make sure that a decision is taken on November 20," Juncker told a press briefing. "I won't tell you how but there won't be a problem on November 16."
European Economic Affairs Commissioner Olli Rehn said "there is a solution," explaining that Greek banks will be able to take part in a government sale of treasury bills that day, providing the money Athens needs to cover the debt.
With that hurdle apparently cleared, the finance ministers recognized that Greece had made "significant progress," a statement said.
The ministers' meeting acknowledged "the considerable efforts already made by Greek citizens and is convinced that continued fiscal and structural reforms will ... allow the economy to return to a sustainable growth path."
Last week, the Greek parliament passed a new package of austerity measures worth 13.5 billion euros demanded by the troika of the EU, the International Monetary Fund and the European Central Bank in return for the next aid payment.
On Sunday, November 11, parliament also passed a very tough 2013 budget, with the combined measures welcomed warmly by Juncker, Rehn and IMF head Christine Lagarde.
With Greece doing its part, the statement said finance ministers agreed that revised fiscal targets, "as requested by the Greek government and supported by the troika, would be an appropriate adjustment."
Athens wants its current 240 billion euros bailout accord running to 2014 to be extended to 2016, giving it more time to meet targets which have been torpedoed by a much deeper economic slump than expected.
There is however a cost involved -- a draft report by the troika seen earlier Monday put the total extra funding needed for the two years at nearly 33 billion euros, with the bill rising as the economic outlook darkens.
It also has to provide some solution to Greece's debt mountain -- now nearly 190% of Gross Domestic Product and supposed to come down to 120%, still twice the EU limit, by 2020.
Sharp differences on this issue came unusually into the open when Lagarde clashed with Juncker who said there was a "great probability" Greece would get the two extra years, in line with other adjustments to its overall program.
Lagarde said she believed the deadline should remain 2020 as for the IMF, "it is critical that the Greek debt be sustainable.... What matters at the end of the day is... the sustainability of the Greek debt.
"We have differences; we are working, trying to resolve them," she added.
Rehn said ministers had also looked at recently announced reform programm in France and the Netherlands which represented "a very substantial fiscal consolidation" and help restore their international competitiveness.
The meeting also looked at Spain's bank recapitalization program, to be funded in part by 100 billion euros in EU aid agreed in June when Madrid looked like being the next eurozone bailout victim.
Meanwhile, German Chancellor Angela Merkel, the leading proponent of belt-tightening as the answer to the euro debt crisis, was booed during a visit to Portugal on Monday.
Her trip coincided with the latest review of Lisbon's 78-billion-euro ($101-billion) international bailout program, extended on condition the country make vast budget savings to plug a mounting public deficit.
"The program is being applied by Portugal in an excellent manner. It is a great exploit," Merkel said at a joint news conference with Prime Minister Pedro Passos Coelho.
"Of course a program of its kind sparks major debate. It is a long and hard process and I know it requires many sacrifices," she added.
The 17 eurozone finance ministers join their 10 non-euro colleagues early Tuesday for another meeting, expected to focus on how to boost the slumping economy and the bloc's hotly contested 2014-20 budget. - Agence France-Presse