Greece Pressed to Resume Austerity Program
By PAUL GEITNER and NIKI KITSANTONIS
— European officials signaled on Tuesday that Greece would have to renew its austerity drive before its next bailout payment was approved but expressed confidence that the country’s new government would have the money to meet a debt payment due in August.Multimedia
The guarded optimism came after a meeting of European finance ministers
at which Greece was told to come up with about 3 billion euros ($3.75
billion) in new savings “in the coming weeks” before its creditors
consider easing the terms of its bailout, the country’s new finance
minister said Tuesday.
“They are asking that we implement the measures we have committed to for
2012,” the finance minister, Yannis Stournaras, told reporters in
Brussels.
Mr. Stournaras said the government could suggest alternatives to the
measures it had agreed to, as long as the new proposals produced the
same result.
“We are considering the measures and we will push to be able to impose them in installments,” he added.
The Eurogroup — the finance ministers of the 17 nations using the euro
— on Monday night heard a preliminary debriefing from representatives
of the so-called troika, who returned to Athens last month after being
away for several weeks after the inconclusive elections in May.
The European Commission vice president, Olli Rehn, said the mission — which includes officials from the commission, the European Central Bank and the International Monetary Fund — would return in 10 days or so for further work.
“In that context we will assess the real financing needs of Greece now,
in the short term,” as well as “various possibilities” for meeting them,
he said at a news conference on Tuesday. “I’m sure they will find a
solution to this problem, as we have in previous rounds.”
At an earlier news conference, the Eurogroup president, Jean-Claude
Juncker, said the ministers would discuss adjusting the terms of
Greece’s bailout program in September.
Asked about a 3.2 billion euro Greek bond held by the European Central
Bank that matures on Aug. 20, Mr. Juncker said “appropriate solutions”
would be found.
At the end of June, Greece received the final installment of 5.2 billion
euros in aid: 1 billion euros that had been withheld after the
country’s inconclusive election in May. The timing and amount of the
next delivery of aid from the 130 billion euro bailout agreed to early
this year will be determined in the coming weeks, a euro zone official
said.
Mr. Juncker said that Mr. Stournaras described the country’s current
situation during the meeting and gave “reassurances that the new Greek
government will take the steps necessary to bring the Greek program back
on track.”
Although Greece made no requests at the meeting, its government hopes to
win an extension of the deadlines for meeting its deficit-reduction
targets. Spain was granted an extension on Tuesday.
“When the time comes, the issue of an extension will be raised
persistently because it is only fair,” Mr. Stournaras said. He noted
that an extension would require additional outside money for Greece —
something the parliaments of some euro zone countries might be reluctant
to approve.
And the formation of a coalition Greek government — albeit a fragile one
— appears to have calmed the nerves of savers worried about political
instability.
According to bank officials, cash has been flowing back into accounts at
a steady pace since the June 17 elections, with 5 billion euros
returning within the last two weeks. About 4 billion to 5 billion euros
was withdrawn in the first two weeks of June.
“The banks lost deposits due to all the uncertainty, but fortunately
after the elections we saw the deposits returning and at quite a
satisfactory pace,” the central bank governor, Georgios A. Provopoulos,
told President Karolos Papoulias in televised comments in Athens.
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