Tags: EU | Europe | Financial | Crisis

Euro Officials Play Down Imminent Greek Bailout

Friday, 16 Apr 2010 07:09 AM

European officials played down signs Friday that Greece would seek a 30 billion euro ($40.58 billion) bailout package from other euro zone nations within days as finance ministers from the 16 countries met for talks in Madrid.

Luxembourg's Jean-Claude Juncker, who heads the group of euro finance ministers, told reporters that "there is nothing in the air which makes me believe that this will come up today."

"Today is not the day for a decision on Greece," Spanish Economy Minister Elena Salgado told reporters before going into the meeting.
German Finance Minister Wolfgang Schaueble told Suedwestrundfunk radio that he believed Greece may not need the financial lifeline agreed by euro zone countries last Sunday.

"We still believe that the Greeks are on the right road, and that in the end they perhaps won't need to take up the aid at all," he said.

Greece asked the European Commission, the European Central Bank and the International Monetary Fund to step up work on the aid package Thursday. EU and IMF officials will visit Athens on Monday.

The Greek government said its request for more details on bailout loans was not a signal that the country would seek aid.

Prime Minister George Papandreou told the Greek parliament Friday that "we are making all preparations as required," describing the financial pledge as "a safe haven."

However, the promise of aid has failed to calm markets who are still charging high interest rates for Greece to borrow. The spread, or difference in yields, between Greek and benchmark Germany 10-year government bonds remains high at around 4.15 percentage points Friday.

Investors are demanding high interest rates for Greek bonds because they believe Greece could be unable to repay debt despite recent efforts to cut a massive budget gap.

There is still uncertainty over the bailout package and how long it would take to be paid out widened the spread Wednesday after a German official said the parliament would need to approve Germany's share, the largest at 8.4 billion euros. That could take months.

The Greek government said Thursday it would hold "systematic negotiations" on the standby loan package with other members of Europe's currency union at a two-day meeting in Madrid.

The IMF has not yet said how much it would pledge — and whether it could offer aid faster than European treasuries. EU officials said they expected the IMF to provide some 15 billion euros.

Greece needs to borrow some 11 billion euros next month and has already raised nearly half of the 54 billion euros it wants to borrow this year. The country is also under pressure to toughen an austerity program to show that it is committed to reducing a deficit from around 13 percent of national income last year to some 3 percent in 2012.

Greece's flagrant flouting of EU debt and deficit limits has triggered drop in the euro's value against the dollar and exposed the flaws in the loose way euro zone governments are supposed to coordinate their economies.

Most euro zone nations are now running deficits above the EU's maximum 3 percent and are promising to reduce those over the next few years.

EU officials are calling for more, saying the European Commission should check budget spending before parliaments do and should monitor how euro member economies are faring. They say these moves could prevent a country like Greece overspending and failing to reform its economy.

They are also warning that richer euro nations, like Germany and the Netherlands, need rely less on exports and consume more, saying they could help rebalance wide differences in the euro area by stoking domestic demand and investment.

Five euro zone ministers missed some or all of the meeting as volcanic ash held up flights in northern Europe. Others from European Union nations that don't use the euro were due to skip a meeting of all 27 countries later Friday.

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European officials played down signs Friday that Greece would seek a 30 billion euro ($40.58 billion) bailout package from other euro zone nations within days as finance ministers from the 16 countries met for talks in Madrid. Luxembourg's Jean-Claude Juncker, who heads...
EU,Europe,Financial,Crisis
647
2010-09-16
Friday, 16 Apr 2010 07:09 AM
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