Bloomberg News

Greek Bailout Funds Wasted on Failed Reforms, Sweden’s Borg Says

February 01, 2012

Jan. 31 (Bloomberg) -- Swedish Finance Minister Anders Borg said resources spent on rescuing Greece have largely been wasted after the country failed to execute reforms linked to the terms of its first bailout.

The euro region’s most indebted nation has fallen far short of pledges to privatize public assets, one of the cornerstones of a reform package tied to its international loans, Borg told reporters in Stockholm today.

Euro leaders left a Brussels summit late yesterday with no agreement over how to plug Greece’s budget gap, while German Chancellor Angela Merkel voiced frustration with the Athens government’s failure to execute the needed reforms. Borg said Greece has only raised about 1 billion euros ($1.3 billion) of the 50 billion euros it agreed last year to collect in privatization proceeds to help pay down its debts.

“Implementation is so lacking,” Borg said. A second International Monetary Fund rescue may be withheld should Greece fail to convince officials it will do better in complying with the terms of new bailout, he said.

“I cannot see how that would come into effect if we didn’t strengthen the implementation part,” Borg said. “So far it seems like a large part of the resources have been wasted.”

Still, Germany’s proposal that an entity appointed by the European Union oversee the Greek budget prompted consternation in Athens and sparked rejection from other European governments, who warned against stigmatizing Greece.

“Greece is a sovereign nation and must enact the promises it’s made,” said French President Nicolas Sarkozy.

Yesterday’s summit was the 16th in the two years since Greece’s fiscal turmoil sent the whole region into crisis mode. Borg said the Hellenic country’s future hinges on a European agreement to measures that would unleash “overwhelming” firepower and bring stability to the markets.

--Editors: Tasneem Brogger, Jonas Bergman.

To contact the reporter on this story: Adam Ewing in Stockholm at aewing5@bloomberg.net

To contact the editor responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net


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