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Monday, August 26, 2013

Greece might need another bailout – Greek FM

Greece might need another bailout – Greek FM

AFP Photo / Louisa Gouliamaki

Greece might need another bailout, but without austerity conditions tied to the money, Greek Finance Minister Yannis Stournaras has stated, adding that this time around the total will be “much smaller” than previous aid packages.
"If there is need for further support to Greece, it will be in the order of about 10 billion euros (US$13.4 billion), or much smaller than the previous programs," AFP quoted Stournaras as saying Sunday to Greek newspaper Proto Thema.

The next bailout would have to be “without new terms,” Stournaras explained, as Greece’s austerity commitments were already planned until 2016, adding that there was “no question” of a fresh cancellation of debt.

Greece has so far relied on two bailouts from Eurozone and the International Monetary Fund: the May 2010 loans worth 110 billion euros (US$147 billion), and February 2012 bailout worth 140 billion euros (US$187 billion).
 
Also, the country’s debt to private creditors was also reduced by 107 billion euros in 2012.

As Europe's largest economy, Germany has so far been the biggest creditor for troubled European economies. The country’s voters fear that any further bailouts and debt write-offs would translate into higher taxes and bite deeper into their pockets.

On Sunday, German Chancellor Angela Merkel spoke out against a write-down of Greek debt, but left the option open for additional bailout money, according to an interview with Focus magazine.

The write-down “could trigger a domino effect of uncertainty with the result that the readiness of private investors to invest in the Eurozone will again fall to nothing,” she said.

A write-down would mean that those who loaned the money to Greece would not get the full sum of the eventual repayment back.

Merkel added that Greece's debt would be reviewed again in 2014 and “until then the country still has much to do and must continue consistently to implement its reforms.” 
Merkel’s comments come after the country’s Finance Minister Wolfgang Schaeuble caused a stir by admitting that Greece needed a third bailout, saying no decision had been taken.

Schaeuble’s statement came at a sensitive time for his party. Germany will hold a general election on September 22.

German officials have played down Schaeuble’s admission. "There is no new situation. Nothing has changed," Schaeuble's spokesman Martin Kotthaus said. "Our position remains that we will assess where Greece stands in 2014 and whether additional measures may be needed.”

The ‘Troika’ of Greece's international lenders - the EU, ECB, and IMF will return to Athens this autumn to re-examine the country’s progress in tackling its debt and whether the government needs to find further savings to meet its 2015-2016 budget targets.

Last month the International Monetary Fund put Greece's uncovered funding needs for 2014-2015 at 10.9 billion euros. However, such estimates are revised frequently and are highly sensitive to budget and economic growth projections, the agency reported.