Bloomberg News

Juncker Says Greece May Win Bailout Aid After Oct. 24 Report

October 06, 2011

Oct. 6 (Bloomberg) -- Luxembourg Prime Minister Jean-Claude Juncker said that international auditors will probably present their next report on Greek finances Oct. 24 and that he expects them to recommend paying the next tranche of aid.

“We need clarity about the sustainability of Greek debt,” Juncker, who also heads the group of euro-area finance ministers, said today in an interview with Germany’s Phoenix television in Berlin. Juncker said he’s “full of hope” that Greece will meet the aid conditions, allowing “a positive decision” by the euro area to release the next loan installment.

After the next payout, policy makers will have to look at whether they can “continue on this program track or have to think of something else to make Greece’s debt sustainable,” he said.

Juncker was due to meet with Chancellor Angela Merkel today as financial shares continued their advance, driven by speculation that euro-region policy makers are working on plans to boost bank capital as they seek next steps to tackle the sovereign debt crisis.

Juncker said that he opposes another boost of the European rescue pool’s funding, citing the difficulty of winning parliamentary approval. European finance officials are discussing how to use the fund’s powers “as efficiently as possible,” including the possibility of leveraging, he said.

Underlining the challenge, Moody’s Investors Service downgraded Italy on Oct. 4 and warned that euro-area nations rated below the top Aaa level may see their rankings cut.

Asked about Italy’s downgrade, Juncker said that “in a worst-case scenario, the financial power of the rescue umbrella naturally wouldn’t be sufficient.”

“Everyone knows that,” he said.

The European Union’s crisis response is lagging behind financial markets, he said.

“We aren’t fast enough,” said Juncker. “Objectively, we’re trailing the financial markets instead of getting ahead of them. That has to do with the governance” of the EU.

--With assistance from Alan Crawford in Berlin. Editors: Alan Crawford, James Hertling

To contact the reporter on this story: Tony Czuczka in Berlin at aczuczka@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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