Sunday 11 December 2016

Aid for Greece not on EU summit agenda

Rainer Buergin

Published 22/03/2010 | 14:50

Greek Prime Minister George Papandreou. Photo: Getty Images
Greek Prime Minister George Papandreou. Photo: Getty Images

European Union leaders may decline to take a decision on financial aid for Greece this week at a Brussels meeting because the country hasn’t asked for help, said German government chief spokesman Ulrich Wilhelm.

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“According to the latest available information, decisions on aid for Greece are not on the agenda” of the EU summit, Wilhelm told reporters at a regular press briefing in Berlin today.

Greek Prime Minister George Papandreou told German Chancellor Angela Merkel in a telephone conversation yesterday that “Greece is in no need of financial aid,” Wilhelm said.

EU governments have been holding “technical talks” in order to be prepared to aid Greece if it becomes necessary, Wilhelm said.

Should the need materialize, “financial assistance by the International Monetary Fund is definitely an issue” for Merkel and the government, he said.

Greece’s funding problems are worsening as financial markets remain in the dark about what sort of aid the country may get if it can’t service its debt.

Greece needs to raise about €10bn to refinance bonds due on April 20 and May 19.

The Greek 10-year bond yield jumped 22 basis points to 6.60pc as of 12:35pm in Berlin. It climbed earlier to 6.64pc, the highest since February 26 based on Bloomberg generic data.

The 6.25pc security due in June 2020 dropped 1.48, or €14.80 per 1,000 euro face amount, to 97.52. That widened the spread over equivalent-maturity German debt by 24 basis points to 347 basis points, the most since February 25.

‘Extremely vulnerable’

Investors should take advantage of gains by the euro against the dollar to sell the currency, as it remains “extremely vulnerable” to a European failure to rescue Greece from its fiscal crisis, BNP Paribas SA said today in a note to investors.

The euro, which has dropped 10pc in the past four months, was little changed at $1.3513 at 1:32pm in Berlin.

The basis of policies toward Greece is the February 11 decision by EU leaders to “take decisive action if the stability of the euro region is threatened,” Wilhelm said.

Aid would only be provided as a “last resort.” EU leaders are scheduled to hold the Brussels summit on March 25-26.

EU leaders must not create “illusions” for markets by building expectations for Greek aid, Merkel said yesterday in an interview with Deutschlandfunk radio.

Her remarks came after Papandreou and European Commission President Jose Barroso said the EU should spell out its aid measures at the summit.

Papandreou is urging EU allies to announce a package that will help reduce the country’s borrowing costs and avoid the need for a bailout.

Merkel last week signaled Greece might have to turn to the IMF for any emergency finance, a shift that put her at odds with French President Nicolas Sarkozy and other backers of a European solution to the Greek budget crisis.

Greece’s 2009 budget deficit reached 12.9pc of gross domestic product, the Bank of Greece said today in a statement.

That’s more than four times the 3pc limit imposed by EU rules to protect the euro.

Bloomberg

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