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Thursday 28 August 2014

Noonan warns of roadblocks to release of €31bn aid for Greece

Published 21/11/2012 | 05:00

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Finance Minister Michael Noonan has said there are still substantial issues that have to be resolved if eurozone finance ministers are to release €31bn in urgently needed bailout funds for Greece.

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Arriving for an emergency meeting of eurozone finance ministers in Brussels, Mr Noonan said that if Greece were given an additional two years to meet its deficit targets it would open up a "funding gap".

"The debate is how that would be filled," he said.

Mr Noonan said he expected the meeting to be a long one, and that there was no certainty that a deal would be reached.

"Everybody wants to see the Greek situation resolved, what's at issue is the means of doing so," he told reporters.

Markets

He said the uncertainty over the Greek situation was not having any negative effect on Ireland's position as regards the international markets.

"Not only is the Irish Government in a position to raise money, but the ESB and Bank of Ireland have been raising money and others will follow suit," he said.

Late last night, Greece looked likely to get the bailout funds it needs to avoid bankruptcy at an emergency European finance ministers meeting called to try and clinch the aid deal and heal a rift with the IMF over the debt-stricken country.

"Greece has delivered (on reform)," said Jean-Claude Juncker, who presides over the Eurogroup of finance ministers from the 17 countries that use the single currency. "(There are thus) good chances of an agreement."

But the ministers and the International Monetary Fund (IMF) first needed to resolve their many differences in this latest show of European Union brinkmanship that looked set to continue long into the night.

A major bone of contention was whether to give Greece, where the economy has shrunk by one-fifth since the crisis broke and which faces a sixth year in recession, an extra two years to arrive at a point where it can raise its own funds.

Greece's debt burden is nearly 180pc of gross domestic product (GDP) and expected to rise to 190pc by 2014. That is about three times the EU's 60pc-limit and way beyond what the country can support, meaning it must be reduced one way or another.

Mr Juncker wants the target of 120pc of Greek debt-to-GDP ratio by 2020 pushed back to 2022.

IMF head Christine Lagarde, whose organisation along with the European Central Bank (ECB) and the EU form the troika overseeing the Greek bail-out, opposes extending the deadline and has very publicly clashed with Mr Juncker over the issue.

The IMF cannot extend more aid to countries if their debt level is classed as unsustainable. But Ms Lagarde was upbeat as she arrived at the Brussels meeting. "We're going to work very constructively to see if we can find a solution to Greece," said the IMF chief.

Irish Independent

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