ECB officials arrive in Greece amid talk of third bailout
German Finance Minister says Athens will need further loan on top of €240 billion already obtained for 2010-2014
Wednesday 21 August 2013
The European Central Bank is checking up on how well Greece is meeting its international bailout obligations today, a day after Germany's finance minister said a third aid programme would be needed to keep Athens afloat.
Joerg Asmussen, a member of the ECB's executive board, was to meet Greece' prime minister, finance minister and central bank governor, and to have talks with Greek business leaders.
His immediate concern is with the next tranche of aid from Greece's second international bailout, due in October.
But his visit was announced the same day that German Finance Minister Wolfgang Schaeuble told an election campaign audience that Greece will need a third bailout on top of rescue loans worth about €240 billion already obtained for 2010-2014.
A Greek finance ministry official speaking to Reuters 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 €10.9 billion. At least part of that shortfall stems from national European central banks refusing to roll over part of the Greek bonds they hold.
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.
Greek officials have suggested any such funding shortfall could be covered with a combination of new rescue loans, or debt support measures like extending maturities or cutting interest rates on loans, as already envisaged under a euro zone decision on Greece last year.
This was what European Union Monetary Affairs Commissioner Olli Rehn was pointing to when cited on Wednesday as saying that while new rescue loans in a third bailout were possible, they were not the only option to help Greece.
"(Greece's) debt sustainability can be improved for instance by extending the loan periods (on existing rescue loans)," Finnish daily Helsingin Sanomat quoted Rehn as saying
The aid programme Schaeuble is expecting will be at least partly financed via the EU budget, German newspaper Sueddeutsche Zeitung cited unnamed sources as saying.
Greece's international lenders - the EU, ECB, and IMF, known as the troika - are due to return to Athens in the autumn to reexamine whether Greece's debt is on sustainable footing and whether the government needs to find further savings to meet its 2015-2016 budget targets.
Progress on reform in the recession-stricken country has been patchy. Tax revenues continue to lag targets and the Greek economy has struggled to show signs of recovery after shrinking by about a quarter from its peak six years ago, mainly as a result of austerity policies imposed under two bailouts.
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