Monday 26 September 2016

Creditors rule out massive third bailout for Greece

Mehreen Khan

Published 28/04/2015 | 02:30

Minister of Finance of Netherlands and President of the Europgroup Jeroen Dijsselbloem gestures at a news conference during an informal meeting of Ministers for Economic and Financial Affairs (ECOFIN) in Riga, Latvia. Photo: Reuters
Minister of Finance of Netherlands and President of the Europgroup Jeroen Dijsselbloem gestures at a news conference during an informal meeting of Ministers for Economic and Financial Affairs (ECOFIN) in Riga, Latvia. Photo: Reuters

Europe's creditor powers have ruled out another "big" bailout programme for Greece as the country edges ever closer to an unprecedented default on its international lenders.

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With relations between the debtor country and its paymasters reaching a fresh nadir last week, the head of Europe's finance ministers, Jeroen Dijsselbloem, said there would be no repeat rescue package of the magnitude agreed in 2010 and 2012.

It had been thought Athens would require a fresh round of loans worth around €50bn to €60bn at the end of June. However, Mr Dijsselbloem said a new rescue would be of a "completely different order" to the current €240bn package.

Since its election in January, Greece's Syriza-led government has been seeking a "new contract" with creditors, pleading for relief on a €330bn debt mountain, and a relaxation of the austerity measures in place since 2012.

Failure to inject a new round of emergency money into the country would further call into question Greece's long-term future in the currency union. Defaulting on the central bank would likely lead to the ECB pulling the plug on the country, warn analysts.

Before then, Athens must scramble to find the cash it needs to pay its public sector salaries and pensions worth €1.7bn at the end of the month.

The Leftist government also faces a €960m loan repayment to the International Monetary Fund in the first two weeks of May.

Greece's standoff with its lenders escalated last week when Finance Minister Yanis Varoufakis was reportedly "hammered" for his failure to deliver on promises to reform the economy at a meeting in Riga.

In a bid to revive talks, Athens has now established a new negotiating team to try to broker the release €7.2bn in bail-out cash.

Despite assurances that Mr Varoufakis has the full support of the government, Athens' new unit will include prominent government officials such as Syriza's chief economics adviser, Euclid Tsakalotos. Mr Dijsselbloem said there were "big, big problems" with Greece's current attempts to release bail-out cash

Amid reports that he would now be sidelined in further talks, Mr Varoufakis vented his frustrations on social media, quoting former US President Franklin D Roosevelt in "welcoming the hatred" of his counterparts, at the weekend.

But in a sign that a compromise may be near, the Greek government is reportedly ready to scrap plans to raise the minimum wage in a fresh reform list presented to Brussels tomorrow, according to reports in Germany's 'Bild'.

Irish Independent

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