Extra aid for Greece on table after Luxembourg meeting

09.05.11 @ 10:09

  1. By Leigh Phillips

BRUSSELS - Another round of aid for Greece and an overhaul of its bail-out package is under consideration, European officials have said following a meeting of finance ministers in Luxembourg on Friday (6 May) that attendees struggled to keep secret.

  • Greece may need a further €25 billion to cover its debts next year (Photo: Aster-oid)

With the likelihood of Athens' ability to return to money markets in 2012 ever-diminishing, a select clutch of eurozone finance ministers gathered in the Grand Duchy to discuss possible options.

Finance ministers from Germany, France, Italy, Spain and Greece attended the meeting alongside EU economics commissioner Olli Rehn.

Greek finance minister George Papaconstantinou informed the core eurozone states on his own economy's state of play.

Even taking into account the €110 billion EU-IMF loan, Greece must find an estimated additional €25 billion by next year to finance debt repayments.

"We think that Greece does need a further adjustment program," eurogroup chair and Luxembourg Prime Minister Jean-Claude Juncker said following the meeting.

However, the possibility of Greece withdrawing from the single currency was not discussed, as had initially been reported by Germany's Der Spiegel Online.

"We're not discussing the exit of Greece from the euro area. This is a stupid idea - no way," he said. "We don't want to have the euro area exploding without any reasons."

French business broadsheet Les Echos is reporting that Papaconstantinou had won agreement on a further €20-25 billion being made available.

A restructuring or controlled default on the country's debt appears to have been ruled out, favouring instead an additional chunk of bail-out cash.

"We were excluding the restructuring option which is discussed heavily in certain quarters of the financial markets," Juncker continued.

Possible options beyond hiking the sums in the €110 billion rescue package provided to Greece last May include extending the payment period.

Athens has already won one round of easing for its payment terms this year. Allowing the EU's €440-billion rescue fund to purchase Greek bonds may be another option.

No decision has been made however, but the choices are to be presented to EU finance ministers later this month.

The ministers who organised the bungled secret meeting have since come in for criticism for their handling of the situation.

Finance ministries and the European Commission issued a series of denials or statements saying little more than 'no comment' after Der Spiegel first reported the meeting, only to confirm that the meeting had gone ahead afterward.

Officials however stressed that no discussion on a Greek euro withdrawal was discussed, but admissions that they had lied about the meeting raise questions as to whether these statements are honest as well.

The single currency declined in the wake of the rumours, sliding to $1.4316 at one point, down 1.3 percent.

One EU official told this website: "Why we needed another hamfisted cloak-and-dagger game that only sends journalists and speculators into a frenzy and makes us all look a bit silly beats me."

Senior experts from the EU-IMF-ECB troika descend upon Athens on Tuesday to review the government's latest €26 billion austerity plans and scheme to sell off €50 billion in state assets.

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