Euro zone delays Greek bailout decision
Finance ministers postpone decision on €12 billion emergency loan
By CFOWorld.co.uk | CFO UK | Published 10:19, 20 June 11
The euro zone has delayed its decision on granting Greece further bailout loans worth €12 billion as wrangling continues over the terms of the prospective deal.
European finance minister’s want Athens to introduce tough austerity measures before they and the International Monetary Fund (IMF) make the latest round of emergency funding available but the Greek government says it needs the extra funds to avoid defaulting on its existing debts.
Fresh loans are expected to be available by mid-July but Athens says this will be too late to avoid a default that could have severely damaging effects across Europe.
The disbursement of funds from the EU and the IMF will depend on fiscal reform laws being passed in Greece, where popular opposition to austerity measures is growing.
Belgian finance minister Didier Reynders said: “To move to the payment of the next tranche, we need to be sure that the Greek parliament will approve the confidence vote and support the programme, so the decision will be taken at the start of the month of July.”
In a statement issued after a seven-hour meeting in Luxembourg that ended in the early hours of Monday morning, the ministers announced they would put together a second bailout of Greece, which missed debt targets in the first rescue plan by big margins.
The new plan, to be outlined by early July, will include more official loans and, for the first time, a contribution by private investors, who will be expected to maintain their exposure to Greece through voluntary purchases of new bonds as existing ones mature.
The statement did not say how large the new bailout would be, or give details of the private sector contribution beyond describing it as “substantial”.
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