17th Apr 2021

Greek loans will be ready in time, EU says

  • Eurozone states will make a "critical mass" of funds available to Greece on time, said the commission (Photo: P.L. Vaarkamp Photography)

The European Commission has insisted that eurozone states will provide enough money to help Greece meet a looming 19 May debt deadline, despite parliamentary hurdles in a number of countries.

At the same time, Spanish Prime Minister Jose Luis Rodriguez Zapatero hit out at market speculation as being "unfounded" on Tuesday (4 May), after Spanish shares suffered sharp losses during the day.

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"We will be ready on time to meet the needs of Greece in terms of refinancing. By mid-May there will be a critical mass [of funds available]," commission economy spokesman Amadeu Altafaj told a regular news briefing in Brussels. "Procedures in some euro area members will last longer than in others, but that was clear since the beginning."

Euro area finance ministers on Sunday agreed to make loans worth €80 billion available to Greece over three years, with the IMF contributing a further €30 billion. However, investors have questioned the ability of some governments to quickly achieve parliamentary approval for the loans, a process necessary in a number of member states.

Deputies in France's lower chamber overwhelmingly approved the aid legislation during an emergency session late on Monday night, with the senate expected to do likewise on Thursday. France has agreed to provide €16.8 billion in bilateral loans to Athens, although Monday night's vote only covered this year's anticipated transfers of €3.9 billion.

The German government, set to contribute €22.4 billion over the three year period, is racing to achieve parliamentary approval by Friday. Debate amongst the country's parliamentarians has already proved to be heated, with crucial regional elections taking place on Sunday and with polls indicating a majority of German citizens are against providing support to Athens. The country's tabloid newspaper Bild has led a media campaign against the loans.

Elections are also proving a factor in Slovakia, where on Monday Prime Minister Robert Fico appeared to toughen his stance on providing Greece with a bilateral loan. "We want to see laws approved by the parliament leading to cuts in salaries, pensions and social benefits. Until then the Slovak cabinet will not authorise its loan," Mr Fico told journalists.

Parliamentary elections in Slovakia are less than six weeks away, with a majority of political parties opposed to Greek support.

In a bid to convince partners and markets it is serious about implementing reforms, the Greek government on Tuesday presented draft legislation outlining a package of budgetary saving measures to parliament, with a vote expected on Thursday. A 48-hour-long public sector strike also got underway and is expected to intensify on Wednesday.

Spanish stocks tumble

Analysts have repeatedly warned that any agreement on a Greek bail-out could cause markets to turn their attention towards Portugal and Spain, also seen as weak eurozone economies. On Tuesday, Spanish stocks suffered heavy loses, especially in the banking sector.

Speaking in Brussels, the country's Prime Minister Jose Luis Rodriguez Zapatero, said market doubts over the Spanish economy are "unfounded."

"I need to confirm that whatever other speculation there is regarding the eurozone, it is unfounded and irresponsible," he said. "We ask all actors to look at the real data."

At 55 percent of GDP, Spain's debt level is roughly 20 percent below the European average, insisted Mr Zapatero, who also pointed to fresh statistics on Tuesday indicating that the country's exceptionally high unemployment rate had retreated marginally. It still hovers around the 20 percent mark.

In a further bid to calm investor doubts, the Socialist politician is set to meet with the main conservative opposition leader on Wednesday to discuss the economy and aid to Greece, the first formal meeting between the two men since October 2008.

Markets would be likely to welcome any signs of co-operation between the country's two main parties, easing doubts over the government's capacity to push through a package of painful austerity measures, intended to cut Spain's budget deficit from the 2009 level of 11.2 percent.

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