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August 22, 2012 4:37 pm
Eurozone leaders have reiterated that they will not make decisions about supplying fresh aid to Greece until after international lenders have completed a review of the country’s finances – which is not expected before September.
The comments, from Angela Merkel, the German chancellor, and Jean-Claude Juncker, the Luxembourg prime minister and president of the eurogroup of finance ministers, were meant to lower expectations as they embarked on a round of potentially pivotal meetings this week with Antonis Samaras, the Greek prime minister.
Mr Samaras was to see Mr Juncker on Wednesday evening in Athens before meeting Ms Merkel in Berlin on Friday and then François Hollande, French president, in Paris on Saturday.
The key question in all those meetings is whether Greece’s creditors – the EU, the International Monetary Fund and the European Central Bank – will be willing to offer the country additional aid to compensate for its setbacks in adhering to the terms of a €174bn bailout.
EU officials estimate that Greece’s funding shortfall could total €20bn or more. The actual number will not be clear until the country’s lenders, known collectively as the troika, complete their review. A team of experts is expected to return to Athens in early September to finish their work.
In addition to checking the country’s progress at hitting a series of financial targets, they are also expected to measure its success at overhauling its economy through sales of state-owned assets, cuts to government payrolls and other reforms.
Their conclusions may determine whether or not Greece’s lenders decide to go ahead with a €31bn disbursement that the country is due as part of the bailout. Without the money, Greece could go broke, and be forced to leave the eurozone.
Mr Samaras is determined to demonstrate to his eurozone partners that – after a faltering start – the country has taken real action, and deserves a two-year extension to meet fiscal targets set out in the loan agreement.
The Greek leader is expected to present such a plan in this week’s meeting. A key element would be a series of financing manoeuvres that Athens believes would provide enough extra money to cover the costs of the delay.
In an interview with the German tabloid Bild, Mr Samaras cast the extension in practical terms, saying it would provide “a little more air to breathe to get the economy going and increase government revenues”.
Ms Merkel, whose government has taken a hard line against further aid for Greece, signalled on Wednesday that she was prepared to listen to Mr Samaras’ case. But any decisions, she emphasised, would have to await the troika report.
“We won’t find solutions on Friday,” she told reporters during a visit to the Moldovan capital of Chisinau. “We will wait for the troika’s report and then we’ll take decisions.”
As he prepared to meet with Mr Samaras in Athens, Mr Juncker also said he was waiting on the troika report, and that he did not expect eurozone leaders to take a decision on Greece before October.
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