German Finance Minister Wolfgang Schaeuble said on Tuesday for the first time that Greece will need another bailout, triggering a storm of protest from opposition parties five weeks before an election in Europe’s biggest economy.
While analysts have long predicted Greece will require more aid, albeit on a smaller scale than previous bailouts totaling about 240 billion euros (US$320 billion), German Chancellor Angela Merkel has tried to keep Greece out of her campaign for re-election to avoid angering German voters who fear they will foot the bill.
Just hours before Schaeuble spoke, Merkel was quoted in a regional newspaper saying there was no point in discussing additional aid to Greece before the end of next year, when its second rescue package will expire.
Yet at a campaign event in northern Germany, her outspoken minister departed from that line, breaking what had been seen as an election campaign taboo.
“There will have to be another program in Greece,” Schaeuble said.
A Greek finance ministry official said a new bailout would involve sums far smaller than previous rescues and would focus on plugging an expected funding shortfall between next year and 2016.
“Greece and its lenders are examining several ways to plug any funding gap that Greece will face over the next few years,” the official said, on condition of anonymity.
The aid program announced by Schaeuble will be at least partly financed via the EU budget, German newspaper Sueddeutsche Zeitung cited unnamed sources as saying, in an advance extract of an article due to be published yesterday.
The newspaper said discussions were underway about making additional money from the EU’s structural funds available to Athens, which could use it to boost the economy and free up national budgetary resources to pay off debt.
The IMF last month estimated Greece’s funding gap for the 2014-2015 financial year at 10.9 billion euros.
Schaeuble’s comments came shortly after the European Central Bank said Executive Board member Joerg Asmussen, a German who used to work for Schaeuble, would be heading to Athens yesterday to discuss progress on reforms needed to ensure the country receives more bailout money.
Last month, Greece received an aid tranche of 5.8 billion euros from its international lenders. It stands to receive another 1 billion euros in October, subject to implementation of further reforms.
Inspectors from the “troika” — the European Commission, European Central Bank and IMF — will return to Athens in the autumn to find out whether the government needs to find further savings to meet its 2015-2016 financial year budget targets.
Schaeuble’s comments played into the hands of the opposition, who, throughout the election campaign, have accused Merkel of failing to tell voters the truth about Greece.
“I have made clear that saving Europe and keeping the continent together comes at a cost, also for us Germans,” Merkel’s Social Democrat (SPD) challenger Peer Steinbrueck said after Schaeuble spoke.
“Now it’s time that Frau Merkel tells people the truth,” he said.
Greens leader Juergen Trittin said Schaeuble had exposed Merkel’s “deceit,” and criticized the chancellor for advocating austerity policies in Greece that had failed to reduce its debt load.