Debt Crisis: Greece to get new €8bn aid tranche
Published 11/10/2011 | 13:21
THE EU/IMF/ECB troika is expected to give Greece an additional €8bn in aid but it also launched a stinging evaluation of the country’s progress in meeting its austerity targets.
Inspectors said new measures are needed for 2013/2014 while privatisation measures will be much lower than had been expected.
Greece, teetering on the brink of default, is already running out of money while the new funds will be released in November.
In a statement, inspectors said: “Regarding the outlook, the recession will be deeper than was anticipated in June and a recovery is now expected only from 2013 onwards.
“There is no evidence yet of improvement in investor sentiment and the related increase in investments, in part because the reform momentum has not gained the critical mass necessary to begin transforming the investment climate.
“However, exports are rebounding—albeit from a low base—and a shift towards a more dynamic export sector, supported by a moderation of unit labor costs, should lead to more balanced and sustainable growth over the medium term.”
Today the Slovakian Government votes on whether to expand the scope of the €440bn European Financial Stability Facility.
On Thursday, Taoiseach Enda Kenny will travel to Brussels to discuss the European debt crisis with Commission boss Jose Manuel Barroso.
Earlier, outgoing European Central Bank president Jean-Claude Trichet has warned the European debt crisis has reached "a systemic" dimension as it moves from from smaller countries to larger ones.
“The crisis is systemic and must be tackled decisively,” he said in Brussels today.
“Sovereign stress has moved from smaller economies to some of the larger countries,”
European leaders have set an October 23 deadline to get the crisis in order against the backdrop of speculation the 17-country currency might not be able to survive in its current form while Greece teeters on the brink of default.
Owners of Greek bonds could face writedowns of more than 60pc, according to Luxembourg Prime Minister Jean-Claude Juncker with Germany pushing for higher haircuts than the 21pc agreed in July.
However, many European banks, including French institutions like Credit Agricole, have big exposures to Greek debt.
Meanwhile, Mr Barroso said he will unveil proposals to recapitalise European banks tomorrow.
"Tomorrow, in the commission I will make some proposals on some of those topics," including the recapitalisation of European banks, Mr Barroso said.
"We are now proposing to the member states to have a coordinated action to recapitalise banks and get rid of toxic assets they may have," Mr Barroso said last week.