Saturday

21st Jan 2017

Third Greek bailout to be worth €10-20bn

  • Schaeuble (c) with Jeroen Dijsselbloem (r), who chairs eurozone finance ministers' meetings (Photo: consilium.europa.eu)

Greece's third bailout is in the making, with a German finance ministry paper leaked to Der Spiegel putting the price tag at €10-20 billion.

In a separate interview with Wirtschaftswoche magazine out on Monday (3 February), German finance minister Wolfgang Schaeuble also said there will be a new Greek package, but noted it will be "far smaller" than the two previous ones, which totalled €240 billion in loans.

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Talk about a third bailout resumed last week at a finance ministers' meeting, after the troika of international lenders (the European Commission, European Central Bank and International Monetary Fund) identified a shortfall of €15 billion in Greece's funding once the current bailout ends this year.

But, according to the leaked German paper, Athens will have to speed up its reforms, as fewer than half of the agreed measures have been implemented so far.

A second debt restructuring deal, as demanded by the International Monetary Fund, is still not part of the German plan - as it would hit eurozone governments, notably Germany, whose banks now hold most of Greek debt.

The Greek government has been praised for reforms, which reduced Athen’s budget deficit.

Economic growth is also expected to return this year. But the country's debt - at 176 percent of GDP - is still far too high for its economy to bear.

With 28 percent of its workforce out of a job and 60 percent of young people unemployed after six years of recession, any new austerity measures risk worsening the social situation in Greece.

The government voted a budget for this year without the troika's approval which contains a €5 billion funding gap for the second half of the year.

The troika is expected to return to Athens in the coming weeks to find a compromise solution which will allow further disbursements from the current bailout.

Liberalising the labour market and the pharmaceutical market are among the most controversial measures still pending.

Meanwhile, a May deadline is looming. At this point Greece will have to repay government bonds worth €11 billion.

EU should raise own taxes, says report

A group chaired by former Italian PM and EU commissioner Mario Monti says Brexit should be used to create EU-level levies to depend less on member states contributions, and to abolish member states rebates in the EU budget.

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