Greek aid talks to conclude soon -- EU
Discussions on the financial aid package for Greece should conclude "in the next days," European Union Economic and Monetary Affairs Commissioner Olli Rehn said after delays in the talks undermined markets across Europe.
“I cannot provide you with details today as we are about to conclude talks,” Rehn said today at a previously unscheduled press conference in Brussels.
“But I can assure you that when we meet next time, and that will be soon, I will give you all the details.”
Financial markets across Europe have been rattled in the past week as the German government delayed approving the rescue plan and Standard & Poor’s downgraded Greece, as well as Portugal and Spain.
The Greek government last week was forced to request the €45bn package of emergency loans from the euro region and the International Monetary Fund after the country’s soaring borrowing costs made it difficult to finance its debt in the markets.
Greek 10-year bonds rose for the first time in four days today on indications the talks will finish soon.
The extra yield that investors demand to hold Greece’s 10-year debt rather than benchmark German bunds fell 100 basis points to 593 points, after soaring above 800 basis points yesterday, the highest ever. A basis point is 0.01 percentage point.
Spanish bonds rose for the first time in nine days, and Portuguese bonds had their first gain in 10 days.
Once agreement is reached on the aid mechanism, “the financial support will give Greece sufficient breathing space from pressures of financial markets to decisively restore the sustainability of its public finances and to put the economy back onto a path of sustainable growth,” Rehn said.
“This exercise is done not only for Greece but for every euro-area member state and their citizens to safeguard financial stability in Europe and globally.”
Germany and the IMF yesterday pledged to speed up efforts to overcome the Greek fiscal crisis. Chancellor Angela Merkel said the “stability of the euro zone” was at stake if a loan package can’t be delivered quickly.
Rehn said the “multi-annual” package of loans will be conditional on Greece meeting its goals for deficit cuts and structural reforms.
Greek Prime Minister George Papandreou has pledged to reduce the budget gap by four percentage points from last year’s total of 13.9pc of gross domestic product, which was more than four times the European Union’s limit.