Sunday

25th Feb 2018

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.

Greece will need third bailout, German minister says

A month before general elections in Germany, finance minister Wolfgang Schaeuble has broken the taboo of admitting that Greece will need a third bailout when the current one runs out, in 2014.

Baltic states demand bigger EU budget

The leaders of Estonia, Latvia, and Lithuania say in a joint letter that they are open to talks on creating "new own resources" for a bigger EU budget after the UK leaves the EU.

Opinion

Greek government's steady steps to exit bailout programme

Growth predictions are positive, exports increasing, unemployment dropping and credit-ratings up, says the head of Greece's Syriza delegation to the European Parliament. Now the government in Athens is looking to design its own reform programme.

Analysis

We are not (yet) one people

Talks on the next EU budget will start on Friday. Brussels wants to do much more than before – and needs a lot more money. But arguing about funds won't be enough.

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