Europe Won’t Accept Laxer Greek Bailout Terms, Borg Says
Swedish Finance Minister Anders Borg said Greece won’t be able to ease terms of its international loan package as the euro area’s most indebted nation faces the prospect of a government led by anti-bailout politicians.
“It will be very difficult to backtrack in the International Monetary Fund program,” Borg, whose country stands outside the euro, said in Stockholm today. “It’s not acceptable to lower demands.”
A surge for anti-bailout candidates in Greece’s May 6 election has reignited European concerns over the country’s ability to stick to the terms of its two bailouts since May 2010. With parliament split, the country at the center of the area’s debt crisis is again facing the risk of a euro exit.
“They have a substantial financing need and therefore they must provide the necessary reforms to become sustainable in the long term,” Borg said.
Alexis Tsipras of the Syriza party, which came second in the election, demanded other leaders renounce support for the European Union-led rescue if they want to enter government. Antonis Samaras of New Democracy and Evangelos Venizelos, the former finance minister who leads the Pasok party, rejected a request to send a letter to the EU revoking their written pledges to implement austerity measures.
Separately, Borg said his country is “skeptical” on re- capitalizing the European Investment Bank, which has been proposed as an idea to ease the region’s crisis.
“They have the opportunity in the current framework to do more and this should be used as a first option,” he said.
In neighbouring Finland, Finance Minister Jutta Urpilainen said that while primary measures to ease Europe’s debt crisis must be structural, regional financing through the EIB is one “possible path.”
Finland won’t decide on the issue now, she said at an event in Helsinki. Prime Minister Jyrki Katainen also said at the same event that he wouldn’t “dismiss” the idea of more financing through the EIB, though it won’t be “decisive” in solving the region’s problems.
The European Commission this week refloated proposals including a 10 billion-euro ($13 billion) capital increase for the EIB and the use of EU guarantees for private bond issues to finance transport and construction projects.
Commission President Jose Barroso has said he expects national leaders at a June 28 summit to approve the extra funds for the EIB, which could unleash 60 billion euros in loans to co-finance projects worth as much as 180 billion euros.
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