Bloomberg News

Euro Area, IMF Say Greek Aid Assured With Reform Progress (1)

June 21, 2013

The euro area and the International Monetary Fund said Greece is assured of its next aid payment as long as it presses ahead with an economic-overhaul program.

Jeroen Dijsselbloem, Dutch head of the group of euro-area finance ministers, said European and IMF experts intend to wrap up their latest review of Greece’s budget-cutting progress in July. The austerity is a condition for fresh payouts of aid under a 130 billion-euro ($172 billion) program.

“We have discussed the state of play on the Greek program, also on financing, and we once again concluded that financing is guaranteed for another year,” Dijsselbloem told reporters late yesterday in Luxembourg after chairing a meeting of his euro-area counterparts. “Further disbursements will be decided on the basis of the review to be finalized in July.”

The assurances came amid further political fallout in Greece resulting from the government’s June 11 decision to shut down public broadcaster ERT, suspend 2,600 jobs there and create a new, smaller company. One of Greek Prime Minister Antonis Samaras’s two coalition partners yesterday rejected his proposals for revamping ERT and today decided to withdraw from the government.

Among the conditions for the international loans, Greece has to reduce the number of workers on the state payroll by 15,000 by the end of 2014.

‘Financing Problems’

“The priority remains for the Greek authorities to deliver on the program quickly,” Gerry Rice, an IMF spokesman in Washington, said in a statement yesterday. “If the review is completed by the end of July, as expected, no financing problems will arise because the program is financed till end-July 2014.”

Greek Finance Minister Yannis Stournaras told reporters in Luxembourg yesterday that the government in Athens must push ahead with plans to shrink the public-sector workforce in order to win an 8.1 billion-euro payout for July. He said the sum could carry Greece until early 2014.

The challenge was highlighted today when the smallest party in the ruling coalition -- Democratic Left -- withdrew over the closure of ERT. The two remaining coalition partners are Samaras’s New Democracy party and the Socialist Pasok, which together have a majority of 153 in the 300-seat parliament compared with 167 with Democratic Left’s support.

“I have full confidence that the main political parties in Greece know what is at stake and that they will find a solution to come together and to solve the outstanding issues,” Luxembourg Finance Minister Luc Frieden said in an interview today.

Dijsselbloem said the failure of euro-area central banks to roll over Greek debt held in investment portfolios poses no immediate funding problem for the government in Athens. He said a solution would eventually have to be found to the issue.

“There are various solutions for that,” Dijsselbloem said. “That does not slam an immediate hole in the financing program.”

To contact the reporters on this story: Corina Ruhe in Luxembourg at cruhe@bloomberg.net; Jonathan Stearns in Luxembourg at jstearns2@bloomberg.net

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


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