European Central Bank Executive Board member Joerg Asmussen (right) follows Greece Finance minister Yannis Stournaras after their meeting at the Greek Finance ministry in Athens, yesterday.
ATHENS: Greece’s progress in meeting international bailout obligations was scrutinised by the European Central Bank yesterday as Germany played down its own finance minister’s comments that another aid programme is needed.
A visit to Athens by Joerg Asmussen, a member of the ECB’s executive board was primarily focused on whether Greece was meeting conditions for a scheduled tranche of money in October.
But it followed by a day German Finance Minister Wolfgang Schaeuble’s public acknowledgement to an election campaign audience that Greece will need a third bailout.
Greece has already been bailed out twice since 2010 with ¤240bn worth of deals coordinated by the ECB, European Union and International Monetary Fund.
It had been expected to seek some form of additional debt relief sooner or later to bring its massive debt down to a manageable level, but the openness of the suggestion of a third bailout for Athens came as a surprise.
Asmussen was meeting Greece’s finance minister after holding talks with the central bank governor, as part of discussions on Greece’s stuttering progress on reforms, deficit cutting and shoring up its banks before fresh aid is released in October.
In Berlin, Germany’s finance ministry sought to play down Schaeuble’s bailout comments, saying the euro zone would take a fresh look at Greece’s aid programme in mid-2014 and that Berlin was not aware of any discussions on how to structure a new rescue package.
“We have reached the middle of the current programme. It is August 2013, we will certainly have to look in mid-2014 at where we are, what the conditions are and whether the programme has been fulfilled,” said spokesman Martin Kotthaus.
A Greek finance ministry official speaking on condition of anonymity said any further help for Greece would aim to cover its funding shortfall in 2014-2016 and would be much smaller than the previous aid packages, given the country’s limited funding needs for the period. The International Monetary Fund has put Greece’s uncovered funding needs for 2014-2015 at ¤10.9bn.
At least part of that stems from national European central banks refusing to roll over some Greek bonds they hold, as well as a potential shortfalls in tax and privatisation revenues and Greece being unlikely to fully return to bond markets next year.
Such estimates are revised frequently and are highly sensitive to budget and economic growth projections, which Greece’s lenders are expected to update in the fall.
Schaeuble’s comments were immediately seized on by Greece’s anti-bailout opposition, who fear that any new aid will be accompanied with yet another round of painful austerity.
“Schaeuble threatens with new help,” leftist newspaper Efimerida ton Syntakton deadpanned on its front page.
Reuters
