Euro Ministers Head Toward Final Approval of Second Greek Rescue
Euro-area finance ministers will move toward completing the next Greek bailout this week as they meet in Brussels tonight.
Luxembourg Prime Minister Jean-Claude Juncker, who heads the group of euro-region finance ministers, said he had “no doubt” that a second bailout program for Greece would be approved and he expected a final decision on March 14.
“As far as principles are concerned, there is no doubt that the second Greek program will be approved,” Juncker said today in Brussels before a meeting of the group.
Ministers from the 17 nations that share the euro are gathering to review the 130 billion-euro ($170 billion) second package for Greece after bondholders agreed last week to take a loss on the country’s debt. They’re also looking at Spain’s budget-cutting efforts and Portugal’s aid program, underscoring their desire to prevent contagion.
Euro finance ministers agreed on March 9 that Greece had met the terms for bailout funding and released 35.5 billion euros in payments and interest to bondholders, while postponing approval of the entire package.
Greek Finance Minister Evangelos Venizelos said today that he’s “very optimistic” the government will achieve 100 percent participation in its debt swap with private investors.
“I am very optimistic for a universal participation in the PSI,” Venizelos said. “From our side, the target is now the full implementation of the program and of course the return of Greece to growth.”
The debt swap seeks to wipe more than 100 billion euros off Greece’s books and contain an economic collapse in the country as European overseers work to hold Greek leaders to their commitments. The difficulties the government in Athens will confront in meeting creditors’ demands have prompted speculation that the country will need further assistance.
“Nobody can now exclude that Greece at a single moment may need a third bailout,” German Finance Minister Wolfgang Schaeuble was cited as saying in an interview published in Belgian newspaper De Morgen. “I have all confidence that the measures that we have taken and that Greece must now implement - - no simple exercise -- will bring the country on the road to recovery.”
European leaders are due to tackle the prospect of bolstering the region’s firewall later this month, a move that has been opposed by Germany. Pressure may increase after the International Monetary Fund said it will scale back its aid to Greece. Under Managing Director Christine Lagarde, the IMF has joined the U.S., Canada and other nations in pressing European leaders to do more to stave off the debt crisis.
Irish Finance Minister Michael Noonan said today that euro- area firewalls are “very important” for his country.
“We always fear contagion from events outside our remit and outside our control,” Noonan told reporters today. “Firewalls in the future would be very important to us.”
Ministers today will also discuss Spain, where Prime Minister Mariano Rajoy defied European Union allies by raising the country’s 2012 budget-deficit goal after overshooting its target last year. Rajoy earlier this month placed the target at 5.8 percent of gross domestic product from 4.4 percent.
The reasons for Spain’s fiscal slippage last year are “perfectly clear,” Spanish Economy Minister Luis de Guindos said after meeting with Schaeuble. De Guindos said he doesn’t expect the euro-region ministers to issue a statement on Spain after today’s session.
Spain expects to be able to clarify any misunderstandings with European partners about the decision at the Brussels meeting, a government official said on March 9. Spain is committed to meeting next year’s target of 3 percent of GDP, the official said, adding that Spain is unlikely to be sanctioned.
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