Greece May Need Third Program After Summer, Dijsselbloem Says

Greece may need another round of international aid depending on how conditions look in a few months, Dutch Finance Minister Jeroen Dijsselbloem said today.

“I’m quite convinced we’ll have to look at it very carefully after the summer to see what the future is and whether that needs another program,” Dijsselbloem, who leads the euro-area finance ministers’ group, said in an interview in Washington.

Greece is in the final stages for part of its second rescue program provided by euro-area authorities and the International Monetary Fund. IMF European Department Director Reza Moghadam said that “financing needs remain very large” and “there will be continued need for support.”

The Mediterranean nation ended a market exile this week with its first bond sale in four years. The country’s finance ministry said demand was driven by “real money investors,” with about half of the 3 billion euros ($4.2 billion) of five-year bonds going to U.K. investors.

The yield on Greek 10-year bonds climbed 34 basis points, or 0.34 percentage point, to 6.28 percent at 6:28 p.m. Athens time. The rate touched 5.80 percent on April 9, the lowest since February 2010.

World’s Biggest

Greece went through the world’s biggest sovereign-debt restructuring and has so far received 240 billion euros in aid commitments. To receive payments from its packages, the country has faced a slew of economic conditions including labor-market reforms and tough budget goals.

“We have a clear deal,” Dijsselbloem said today. “If Greece needs further support, if they stick to their commitments and have reached a primary surplus, a sustainable primary surplus, then we stand ready to support them further, that’s always been the deal and we will stick to that deal.”

Bailout overseers say they don’t believe Greece is ready to go it alone.

“They don’t have full access to markets as yet,” Dijsselbloem said.

“The debt remains very high and these issues will continue to need to be addressed by Europe and the fund in the context of future reviews because the financing needs for the next two years will be quite large, much larger than the amounts that are currently being raised,” the IMF’s Moghadam said at a press conference in Washington today.

Greece’s bond sale exceeded the government’s 2.5 billion-euro target and has a coupon of 4.75 percent. The sale is “a big success” and also will need careful follow-up so Greece can eventually regain access to the full spectrum of maturities, said Klaus Regling, chief of the European Stability Mechanism firewall fund.

“You can argue and some people have said it, don’t do it too much because it’s still expensive money compared to some alternatives,” Regling said in an interview today. “Hopefully it will also not lead to complacency because Greece has come a long way but needs to continue with its reform process.”

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