Thursday

11th Aug 2022

Greece will need new bailout aid, Dijsselbloem says

Greece will need more time and money to successful emerge from its bailout programme, Eurogroup chief Jeroen Dijsselbloem has confirmed.

Speaking on Thursday (5 September) with members of the European Parliament's economic affairs committee, Dijsselbloem, who is also the Dutch finance minister, told MEPs that: "It is clear that despite recent progress Greece's troubles will not have been completely resolved by 2014."

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He added that it is "realistic to assume that additional support will be needed beyond the programme."

He also reiterated the Eurogroup would stand by the crisis-hit country and is prepared to offer further reductions to the interest rates on the bailout loans.

"The Eurogroup has indicated clearly that it is committed to providing adequate support to Greece during the current programme and beyond until it has regained market access," he said.

Dijsselbloem has become the first eurozone official to admit that Greece will need more time and money to cope with its debt burden, which currently stands at around 190 percent of GDP.

But he insisted that no decisions on additional funds or changes to debt maturities would be taken before April 2014.

He also refused to comment on how new money Greece would need, noting that "speculation is not helpful."

The International Monetary Fund (IMF), itself one of Greece's creditors, has estimated that Athens will need an extra €11 billion to fulfil its repayment obligations, while Greek finance minister Yannis Stournaras has indicated a €10 billion figure.

Representatives of the troika, Greece's international lenders, are in Athens this month for the latest review of Greece's programme, which is already worth €240 billion.

Dijsselbloem sounded a generally positive note on Greece's economic prospects, describing the programme as "broadly on track" and praising officials for making "real progress in difficult circumstances."

He added the Greek economy would return to growth in 2014 after six consecutive years of recession, which has seen the country's output fall by around 25 percent.

However, there is increasing reluctance among northern Europeans prospect to providing further support to Athens.

Although her finance minister, Wolfgang Schaueble, broke ranks on the issue in August, German Chancellor Angela Merkel has sought to downplay the prospect of new bailout terms as she campaigns for re-election for a third term.

German taxpayers are already liable for €150 billion in bailout loans across the eurozone, according to research by the Handelsblatt Institute.

Meanwhile, Ireland is also in line for eurozone help as it exits its own bailout at the end of 2013, revealed Dijsselbloem. "There will be support to make sure that it is a good exit and not a temporary exit," he said.

Analysis

Why did Schaeuble break the Greek bailout taboo?

German finance minster Schaeuble put a cat among the pigeons by saying Greece will need a third bailout, a taboo before September elections. But insiders say it was no accident.

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