Europe and the IMF could slash into two parts a short-term cashflow fix for Greece that had been expected to be agreed yesterday, Belgium’s finance minister said.
“We must above all find short-term financing,” Didier Reynders said on his way to two days of talks in Luxembourg ultimately aimed at paving the way for a second bailout package.
This comes amid fears renewed problems in Greece’s finances could spark fresh contagion across the rest of the euro currency area.
“There are financing capacities at the International Monetary Fund, capacities at the European Union to find the just under six billion euros needed between now and the start of July,” Mr Reynders said.
A diplomatic source said the idea was to keep Greece afloat while testing market reaction, seeing if bond spreads widen for other stressed eurozone states, around decisions reached at a full summit of EU leaders in Brussels on Thursday and Friday.
Greece could technically go bust if it cannot meet a funding bottleneck early next month.
Its euro partners have still to approve loans of over €8.7 billion, its share of a 12-billion-euro fifth tranche of funding for the stricken economy from last year’s 110-billion-euro bailout.
That tranche would be completed by a further €3.3-billion portion from the IMF, which the Washington-based lender of last resort did not want to pay out until an outline deal on financing through to the end of 2014 was agreed in Europe.
However, some countries are resisting handing over any more money until Greece demonstrates it can get a new package of austerity and other economic reforms through its parliament.
A government reshuffle was required last week to quell a growing wave of protests in Athens, but Prime Minister George Papandreou still has to get new measures including tax rises and a state asset sell-off past lawmakers.
Dutch finance minister Jan Kees De Jager said more money for Greece could only be given if Athens does its bit, and does so to the approval of IMF inspectors.
“The fifth tranche depends on Greece’s implementation of all the austerity measures, and the IMF’s assessment of that,” he said on his way into talks not expected to be conclusive overnight.