Business World

Monday 19 March 2018

Debt Crisis: Greek leaders provide written assurances of commitment to bailout

Luke Baker and Dina Kyriakidou

GREEK coalition leaders have sent written confirmation of their reform guarantees to the European Union a day after a decision was made to cancel an extraordinary meeting of eurozone finance ministers set for this evening to decide on a vital €130bn bailout for the country.

There will be a teleconference today instead.

Jean-Claude Juncker, the Luxembourg prime minister, who chairs the eurogroup, blamed the lack of assurances from Greece's leaders that they would comply with the tough terms attached to the bailout for the postponement.

Ministers in the Eurogroup had been expected to gather in Brussels today for a meeting which, if all had gone to plan, would have approved the €130bn euro rescue and save Greece from a messy bankruptcy next month.

However, with the European Union's patience with Greece close to breaking point, Eurogroup Chairman Jean-Claude Juncker said the ministers would hold only a telephone conference call before a regular meeting already scheduled for February 20.

Mr Juncker today received the written undertakings he was seeking from Greek party leaders on pushing through with the austerity package of pay, pension and job cuts -- which parliament passed on Monday as rioters torched dozens of buildings in central Athens.

Mr Juncker also said the funding hole required more talks with the "troika" of Greece's EU and IMF lenders.

"It has appeared that further technical work between Greece and the troika is needed in a number of areas, including the closure of the fiscal gap of €325 million euros in 2012 and the debt sustainability analysis," he added.

A government official in Athens has said the leaders of Greece's two biggest political parties, New Democracy's Antonis Samaras and Pasok's George Papandreou, provided the written commitments demanded by the European Union and the International Monetary Fund.

Critics say the drastic belt-tightening is only deepening Greece's recession, now in its fifth year. With an election expected in April, the EU wants any politician who might take power afterwards to promise to stick with the programme.

The frontrunner to become prime minister, conservative New Democracy leader Antonis Samaras, indicated during Sunday's parliamentary debate that he would try to renegotiate the terms of the bailout, further sowing doubt in the minds of European leaders who say they are tired of broken promises.

However, a senior New Democracy official, who declined to be named, said the fact that the party had backed the package in parliament proved its commitment.

"There is no greater commitment than our vote regarding the implementation of the measures," he told reporters

"None of the measures we voted for can be reversed. But we will discuss with our partners measures that don't bear fruit, in order to meet our targets faster," he said. "The only thing we've said is that growth should be our priority."

The cabinet of Prime Minister Lucas Papademos met in Athens to fill the €325m hole in its overall package of €3.3bn in extra budget cuts this year which it must spell out in detail to get the new rescue from the EU and IMF.

Greek politicians have sailed past a series of deadlines in committing themselves to the budget cuts which provoked the most serious violence in Athens in years. Every time they appear finally to have settled everything, new problems or disputes surface, angering the EU.

Athens needs the funds to avoid a disorderly default when €14.5bn in debt repayments fall due on March 20.

But the punishing austerity measures are fuelling social turmoil in Greece, where unemployment hit a high of 20.9pc in November and half of young Greeks are jobless.

The country posted yet more dire economic figures yesterday with flash estimates showing GDP shrank 7pc in the fourth quarter of 2011 after a 5pc contraction in Q3.

Asked if the eurozone could survive Greek bankruptcy, German Finance Minister Wolfgang Schaeuble told ZDF public broadcaster: "We are better prepared than we were two years ago."

Irish Independent

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