Greece in limbo after bail-out talks fail

21.11.12 @ 07:20

  1. By Benjamin Fox
  2. Benjamin email

BRUSSELS - Eurozone finance ministers will reconvene next week (26 November) after failing to reach a deal on whether to release the next tranche of Greece's multi-billion euro loan programme. Talks aimed at staving off imminent Greek bankruptcy broke up on Wednesday morning (21 November) after nearly 12 hours of negotiations in Brussels

Although the seventeen ministers in the Eurogroup had been expected to announce the release of €31.5 billion of emergency funds, as well as changes to the country's ambitious debt reduction timetable, the fine details could not be agreed.

A senior EU official confirmed to EUobserver that "technical problems" meant that ministers would meet after the conclusion of the EU budget summit.

Speaking with reporters outside the European Council, Eurogroup chairman, a bleary eyed Jean Claude Juncker, admitted that he did not know precisely when Greece would receive the funds, but insisted that the Troika composed of the European Commission, IMF and European Central Bank faced "no major stumbling blocks."

“We are close to an agreement but technical verifications have to be undertaken, financial calculations have to be made and it's really for technical reasons that at this hour of the day it was not possible to do it in a proper way and so we are interrupting the meeting and reconvening next Monday.”

"Greece has delivered, now it's up to us to do the same", he concluded.

Meanwhile, a statement prepared by the Eurogroup praised Greece's “strong commitment to the adjustment programme” adding that it had "made progress in identifying a consistent package of credible initiatives aimed at making a further substantial contribution to the sustainability of Greek government debt."

Greece is set to enter a sixth straight year of recession with economic output around 25% below its pre-crisis level of 2007.

The main reason for the delay is continued disagreement with the International Monetary Fund over the length of Greece's debt timetable.

At the press conference following the Eurogroup's meeting last week, IMF boss Christine Lagarde publicly disagreed with assertions by Juncker that Greece would be given an extra two years, taking it up to 2022, to reduce its debt to GDP ratio below 120%.

Facing questions about the state of negotiations on Wednesday morning, Lagarde told reporters that "it's progress but we have to do a bit more".

Lagarde is still insisting for the 2020 timetable to be kept and in return for eurozone governments to accept losses on their Greek bond holdings. But this solution remains taboo for Germany, which points to legal limitations.

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