Eurozone mulls finance for Greece

Written By Unknown on Senin, 12 November 2012 | 19.12

12 November 2012 Last updated at 06:58 ET

Eurozone finance ministers are meeting in Brussels to discuss whether to release new funds to indebted Greece.

Athens hopes it has done enough to secure the next instalment of bailout money, after passing a budget for 2013 which involves large spending cuts,

Eurogroup chief Jean-Claude Juncker says there will be "no definitive decision" on Monday on the funds.

Greek PM Antonis Samaras earlier warned that without the new loan, Athens would run out of money within days.

Mr Juncker has also said a long-awaited report on the pace of Greek reform by its three international creditors - the European Commission, the IMF and the European Central Bank - is "positive".

Many in Greece will feel that they have given all they can - and that Europe must now stick to its side of the bargain and provide the rescue funds that this debt-stricken country so desperately needs, says the BBC's Mark Lowen in Athens.

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Analysis

It has been a gruelling few days for the Greek government: hugely unpopular cuts squeezed through parliament; its majority reduced after rebel MPs were ousted; and yet more violent protests.

Greece had hoped its reward would be bailout funds. But Brussels says Athens must wait for an agreement on how to deal with the Greek debt level, how to stop throwing good money after bad.

The prime minister had warned that Greece's coffers would empty on Friday. Now interim financing seems likely until the funds are released. But bankruptcy still hovers on the horizon. And if the bailout cash is not secured soon, it will reinforce the feeling in Greece that the painful cuts are in vain and that Europe is not sticking to its side of the bargain.

That would make the government's position even more fragile - and lead any remaining confidence here to fade fast.

Greek MPs approved the 2013 budget, which includes further cuts to pensions and wages, in a vote on Sunday night.

More than 10,000 people joined demonstrations outside parliament to protest against the cuts.

The budget was a pre-condition for Athens to be granted a 31.5bn euro (£25bn; $40bn) EU/IMF loan necessary to stave off bankruptcy.

Greece faces a repayment deadline for 5bn euros of debt on Friday.

However, German Finance Minister Wolfgang Schaeuble has indicated it is unlikely that the eurozone ministers will decide on the disbursement at Monday's meeting.

The funding will have to be approved first by some parliaments, including Germany's.

"We all... want to help Greece, but we won't be put under pressure," Mr Schaeuble told the weekly newspaper Welt am Sonntag.

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Measures in austerity package

  • Retirement age up from 65 to 67
  • A further round of pension cuts, of 5-15%
  • Salary cuts, notably for police officers, soldiers, firefighters, professors, judges, justice officials; minimum wage also reduced
  • Holiday benefits cut
  • 35% cut to severance pay
  • Redundancy notice reduced from six to four months

On Tuesday, Greece is to make an urgent bid to raise funds from the financial markets in case it does not get the tranche of bailout money.

The budget - which contained many austerity measures which had already been passed by parliament - foresees a deepening of the worst recession of any country in modern history, our correspondent says.

The national economy is expected to shrink next year by 4.5% and public debt is likely to rise to 189% of GDP, almost double Greece's national output. This year, public debt stood at 175%.

The head of Syriza, a left-wing opposition party, said the budget cuts would leave Greeks unable to afford essential goods this winter.


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