Eurozone finance ministers began talks yesterday to discuss how to bring Greece back from the brink, knowing that agreeing to ease the terms of its bailout could cost nearly €33 billion more.
“A financing gap over the programme has emerged due to lower privatisation proceeds, slower growth and concomitant lower revenues, and a longer horizon for correcting the excessive (public) deficit,” a draft report prepared by Greece’s international creditors said.
Under its current bailout to 2014, Greece’s creditors the European Union, International Monetary Fund and European Central Bank had expected Athens would need six billion euros in additional funding as it missed targets due to the economic slump.
But if the terms are eased, Athens will need €15 billion to cover 2013-14 and €17.6 billion for 2015-16, up from an anticipated €14.1 billion for that period, according to the report seen yesterday by AFP as eurozone finance ministers began a meeting to discuss the Greek bailout.
Finance ministers are relying on the long-delayed report, drawn up by EU-IMF-ECB officials, to assess Athens’ efforts to meet its targets and decide whether to release its next aid tranche of some €31 billion.
The report said that even though Greece might find itself in a better position as the programme runs, “it is prudent to assume that markets may remain sceptical about Greece for a longer period, given the vulnerability resulting from the high debt ratio and political risks.”
In that case, Greece would not be able to raise funding from the markets and would have to rely on its creditors.
Earlier, Jean-Claude Juncker, who heads the Eurogroup of finance ministers, said the troika report was positive overall and had concluded that Athens had “delivered” on its reform pledges.
Juncker said ministers had finally received the report Sunday and it “is positive in its fundamental tone because the Greeks really delivered. Now it is for us to deliver.”
In the run-up to the meeting, officials had made plain that no final decisions were expected, with perhaps another gathering needed before Greek can get its aid payment.
Time is pressing however — Greek Prime Minister Antonis Samaras has said the country will be broke by Friday if it does not get the aid and although officials have played down that possibility, it is clear that a decision is needed soon.
“We need to find creative solutions,” Austrian Finance Minister Maria Fekter said as she went into the meeting while IMF head Christine Lagarde called for a “real fix, not a quick fix.”
“We are waiting for more information today,” Finnish Finance Minister Jutta Urpilainen said on arrival. “Then we will see if we’re able to make decisions today or later this week.
Juncker, who is Luxembourg’s prime minister, said a new austerity package adopted by the Greek parliament Wednesday and a cost-cutting 2013 budget agreed late Sunday were “very ambitious” and “fulfils our wish list nearly completely”. But there would be “no definitive decision” today, he added.
Yesterday’s talks come after the Greek Parliament, despite noisy protests, agreed a tough budget for next year that further slashes pensions and wages, the latest hurdle cleared by Athens in exchange for foreign aid.