Next batch of Greek bailout money slated for November
Eurozone finance ministers say Greece will get its next batch of aid money — likely by mid-November — saving the country from a potentially disastrous default.
The ministers said Friday that Greece would get the next €8 billion ($11 billion Cdn) batch as long as the International Monetary Fund signs off on its part in coming weeks.
JOE SCHLESINGERDear Greeks: There is life after default
Finance ministers from the 17 countries that use the euro approved the bailout loans Friday, but acknowledged the country’s debt remained too high.
Greek Finance Minister Evangelos Venizelos welcomed the news that Athens would get the next installment, calling it a “positive step.” A day earlier, Greek lawmakers approved new, deeply contentious austerity measures.
The new measures will ensure next year’s fiscal targets are met and “sets the basis for the necessary structural reforms,” he said.
“The great sacrifices of the Greek people and the implementation of tough but nationally necessary rescue measures are the basis not only for the sixth tranche, but for the new program that will ensure the long-term viability of the Greek public debt,” Venizelos said.
The loans will keep Greece afloat for a little longer, but most economists agree that the country also needs a substantial cut to its debt load. The finance ministers said they were looking at ways to do that, including imposing bigger losses on the banks that hold Greek bonds.
The ministers said that they were working on a second rescue package for Greece, which would include new aid money and contributions from the private sector.
They did not give details on the new package.
If Greece’s debts are not reduced, the country will not be able to raise money on financial markets for another decade, according to a new report by the country’s international creditors.
A person familiar with the report said a deal reached with banks in July to give Greece easier terms on its bonds would leave it with a debt of 152 per cent of economic output in 2020.
The person spoke on condition of anonymity, because the report is confidential.
Eurozone crisis bigger than Greece
Greece’s debts are only one piece of Europe’s economic puzzle, and the finance ministers were meeting in Brussels on Friday to address two more complicated — and arguably more important — issues: boosting the financial firepower of the eurozone’s €440 billion ($610 billion Cdn) bailout fund in order to prevent the larger economies of Italy and Spain from spinning out of control and forcing weak banks to boost their capital buffers to shore up their defenses against market turmoil.
Violent protests against new austerity measures continued to rock Athens, Greece’s capital, on Oct. 20. Here, a demonstrator throws stones at rival demonstrators. (Thanassis Stavrakis/AP)
Disagreements between Germany and France over how to increase the effectiveness of the bailout fund — or European Financial Stability Facility — have already derailed plans to come up with an overarching strategy to beat a path out of the crisis this weekend.
A second summit has now been scheduled for Wednesday, and officials said a second eurozone finance ministers’ meeting would likely be held Tuesday.
“Once we have the option for the leveraging (of the EFSF) then — building on that — we can develop all other points,” said Austrian Finance Minister Maria Fekter, as she arrived for the meeting in Brussels.
Markets appeared to be giving Europe the benefit of the doubt, with stocks and the euro trading substantially higher on Friday.
Flaherty calls for an exercise of political wil“Delay is the enemy,” Finance Minister Jim Flaherty said in Ottawa Friday morning, before the latest development in the Greek bailout negotiations.
He expressed concern over the slow pace of action, and called for “an exercise of political will, decisiveness and clarity” in eurozone crisis negotiations .
“Their delay has made a serious situation a severe situation that endangers the global economy,” he said.