Tags: Germany | Greece | reforms | economy

Germany Renews Pressure on Greece for Reforms

Tuesday, 04 September 2012 09:02 AM

Germany's finance minister on Tuesday renewed his pressure on his Greek counterpart to implement fully Athens' pledges to its creditors ahead of a crucial debt inspectors' report, which set to be presented in October.

Greek Finance Minister Yannis Stournaras informed Germany's Wolfgang Schaeuble at a meeting in Berlin about "Greece's progress in complying with the conditions" of its second bailout, Schaeuble's ministry said in a statement. It said the atmosphere was "friendly and cooperative."

The new coalition government in Athens is drawing up a new program of austerity measures worth some 11.5 billion euros ($14.5 billion) in cutbacks as it scrambles to satisfy debt inspectors and creditors that it should continue to receive financial aid.

Inspectors from the so-called troika — the European Union, IMF and European Central Bank — will review Greece's efforts this month. The next rescue loan installment of 31 billion euros ($39 billion) hinges on a favorable report.

If the troika finds Greece has been falling back on its commitments and halts the installments, the country will run out of cash and could have to leave the euro, triggering further financial volatility across the 17 countries that use the common currency.

"Current plans assume that the report can be presented in October," Tuesday's Finance Ministry statement said. No firm date has been set for the report, but there had been hopes it could be ready this month.

German Chancellor Angela Merkel says she wants to keep Greece in the euro, but her government — the biggest contributor to the financial rescue effort — also has made clear that Athens must carry through unpopular budget cuts and economic reforms. Officials are cool to Prime Minister Antonis Samaras' argument that Greece should have more time beyond the mid-2014 deadline to complete reforms.

Schaeuble reminded Stournaras that "it is central for Greece to implement fully its commitments," his ministry said.

Stournaras also met Germany's foreign minister, Guido Westerwelle.

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