Greece made to sweat on bid for more time to pay

Angela Merkel tells Antonis Samaras that decision on bail-out will 'not be taken prematurely'

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The Independent Online

The eurozone's paymaster had a blunt message for the currency bloc's most desperate member yesterday: be patient. The German Chancellor, Angela Merkel, told the Greek Prime Minister, Antonis Samaras, that his request for more time to meet his country's bailout commitments would not even be considered until international inspectors, known as “the troika”, had completed their latest audit of the country's books next month.

"We will not make premature judgments but will await reliable evidence," Ms Merkel said at a joint news conference in Berlin.

She did, however, stress that she did not want to see the struggling nation crash out of the single currency. "Greece is part of the eurozone and I want Greece to remain part of the eurozone" she said.

For his part, Mr Samaras reiterated that Greece urgently needed more leeway from its eurozone partners and the International Monetary Fund to deliver on its deficit-reduction commitments. "We're not asking for more money," he said. "We're asking for breaths of air in this dive we are taking."

But many financial analysts argue that extending the time allowed for Greece to make its cuts, as Mr Samaras wants, will inevitably result in the country applying for another financial aid package, on top of the two it has already received since May 2010.

And some German politicians have been heaping pressure on Ms Merkel not to give way. The leader of Ms Merkel's parliamentary party, Volker Kauder, said of the Greek package yesterday, in an interview on German TV, that "neither the time nor the content can be renegotiated."

The German Finance Minister, Wolfgang Schauble, said a clause in the Greek bailout deal allowing more time for deficit reduction in the case of a worse-than-expected recession was "not legally binding".

The German Economy Minister, Philip Roesler, said last month that the prospect of a Greek exit from the eurozone had "lost its horror". At yesterday's press conference, Mr Samaras chided the German media for talking up the prospect of a Greek exit from the eurozone, saying it was merely serving to undermine the Greek economy, which is projected to shrink up to 7 per cent this year.

"Would any business invest euros in something if he thinks he will get back drachmas? Of course not," he said. The troika is made up of inspectors from the International Monetary Fund, the European Central Bank and the European Commission. They are due to rule in September on whether Greece is doing enough to warrant the release of the next instalment of its bailout funds, worth €31bn.

Mr Samaras has identified €11.5bn in public spending cuts in order to bring Greece's deficit down to 3 per cent of GDP by 2015. But reports have suggested that the troika is preparing to tell Greece that it needs to find €13.5bn to stay on target due to the deterioration in the Greek economy.

Mr Samaras is due to meet the French President, François Hollande, today, and analysts say he is likely to get much the same response. Mr Hollande discussed Greece with Ms Merkel over dinner in Berlin on Thursday.