French Economy Minister Christine Lagarde said on Saturday that she does not expect eurozone finance ministers to make any decision on financial help for Greece when they meet this week.
“I’m certainly not expecting any decision being made, or any button being pressed, or any button being selected to be pressed, because it’s totally premature,” she told reporters at a press briefing at the Lycee Francais in New York.
Finance ministers from the 16 countries using the euro, the Eurogroup, meet today in Brussels to discuss the Greek debt crisis and the country’s progress in introducing austerity measures necessary to regain the confidence of markets.
PHOTO: AFP
Lagarde said Greece “has delivered enormously” with the steps it has taken to address its fiscal crisis.
Lagarde told the Wall Street Journal on Friday that Greece’s efforts to clean up its finances have so far ruled out the need for a bailout from the EU. She told the paper that Greece had over-delivered by coming up with spending cuts equal to 2 percent of GDP where she had expected cuts worth 1.5 percent.
An EU source said that eurozone finance ministers are likely to agree today on the principles and parameters of financial help to Greece, if it is required, but leave out any sums until Athens asks for them.
British newspaper the Guardian reported that aid to be made available to Greece could reach 25 billion euros (US$34.4 billion). Greece’s borrowing needs for the whole of 2010 total 53.2 billion euros.
Greek Finance Minister George Papaconstantinou has to show his EU counterparts in two days of meetings that Athens can enforce draconian cuts while fighting a recession and facing angry protests on the streets.
Detailed options for European-level financial support to help Greece out of its debt crisis will also be presented to eurozone finance ministers when they meet today and tomorrow, European sources said.
Reports suggest two main proposals will be on the table.
One involves a series of loans by European partner countries, coordinated by the European Commission, the EU’s executive arm, while the other would see the Commission borrow money on markets and extend Greece loans guaranteed by EU states.
An internal Commission document quoted by French daily Le Monde said tht the first option is seen as easier in the short term, but the second is favored in the long-run.
But the latter approach would require the assent of skeptics in Britain and Sweden because the Commission acts for all 27 EU member states, and not just the 16 that share the euro.
Papaconstantinou’s briefing comes under Greece’s duties to regularly report its finances after the EU imposed “quasi-permanent” supervision last month in reaction to Athens revealing that it had grossly under-reported its budget figures.
The Socialist government early this month unveiled a wave of state spending cuts and tax hikes worth 4.8 billion euros and hopes to save a total of around 15 billion euros this year, according to finance ministry sources.
More cuts are on the way. A new law overhauling the tax system is expected by the end of this month and legislation to reform pensions and increase the statutory retirement age will come next month.
However, in a report released ahead of the EU finance ministers’ meetings, Greece admitted recession could force it to take further deficit-cutting steps.
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