Greece heads for another audit of its battered finances this week after European officials closed ranks to quash fears of an inglorious Greek exit from the euro cited in a German online report.
A high-level team of experts from the EU, the IMF and the European Central Bank will pore over plans by the Greek government to economise some €26 billion over three years to help bring down the country’s enormous debt.
“The mission will begin on Tuesday(tomorrow),” a finance ministry source said.
Socialist-led Greece is under pressure to deliver on a painful overhaul of its parlous economy after taking a €110-billion bailout loan from the EU and the International Monetary Fund last year.
The delivery of a 12-billion-euro instalment from that loan hinges on the audit but Greece so far has struggled to meet its deficit-reduction targets because of a deeper-than-expected recession at home.
With Athens increasingly likely to need more help to meet its debt repayments from 2012, eurozone ministers met unofficially last Friday to “plan the next steps” in the face of market scepticism, the finance ministry said.
But the meeting backfired when German daily Der Spiegel reported that the participants were also to discuss the prospect of Greece leaving the eurozone, forcing senior Europeans into a flurry of denials.
Other news reports said the eurozone officials had debated milder recovery terms for Athens that could include an extension of debt repayment and more time to meet deficit reduction goals.
Greece currently has a debt of €340 billion euros.
Without naming its source, French business daily Les Echos said Saturday that Greek Finance Minister George Papaconstantinou had secured tacit acceptance that Greece’s political backers could make another 20-25 billion available if more cuts and accelerated state sell-offs failed.
In past weeks, a number of prominent Socialists including the head of the parliamentary economic oversight committee and a former prime minister have spoken in favour of debt restructuring, a move rejected by the government.
Labour Minister Louka Katseli, an economist and former OECD official, joined the fray on Sunday in statements to Eleftherotypia daily, favouring a repayment extension over a debt haircut.
A ‘haircut’ is a form of restructuring that entails losses for debt holders.
“Any logical person would agree... with a possible payment extension or a reduction in the cost of borrowing,” Ms Katseli said.