Europe faced the spectre of Greek calls for new financial aid yesterday as Athens’ “catastrophic” finances returned to haunt stressed eurozone states, despite efforts to prevent panic.
Greek Prime Minister George Papandreou yesterday urged “everyone, inside and outside Greece, in the EU in particular, to leave Greece in peace to do its job.”
Finance Minister George Papaconstantinou also warned bailout bosses gathered for unscheduled G20-eurozone talks in Luxembourg last Friday that Athens needs “breathing space,” Greek media reported.
But at the same time, his country’s press and specialist financial reports were raising the possibility that the government may yet come calling for fresh EU funds on top of the €110 billion agreed upon a year ago.
The resurrection of the Greek debt conundrum comes days after a €78billion aid package was agreed with Portugal and fresh from a €67.5 billion international rescue for Ireland.
Officials meanwhile denied the Luxembourg talks were a crisis meeting on Greece.
Such meetings “take place at irregular intervals”, sometimes in person and sometimes in a conference call, a German government source told AFP.
Greece was discussed last Friday but so was market regulation and the situation in Portugal, the source added.
“This was not a ‘crisis meeting on Greece’, as presented in some press reports,” Amadeu Altafaj, spokes-man for EU Economic Affairs Commissioner Olli Rehn, also said.
Reports said ideas under discussion included postponing the maturity of €65 billion worth of Greek bonds this year and next, and pushing back deficit reduction – said to be unacceptable in Berlin.
The Greek public deficit for 2010 was recently revised upwards, from 9.4 per cent of GDP to 10.5 per cent.
The Kathimerini daily said Athens would need “two to four years” more to meet a three-per-cent-of-GDP EU ceiling and that Greek bondholders could be offered higher rates in the long term in return for a two-year interest-free “grace period”.
“We think that Greece does need a further adjustment programme,” said Luxembourg Prime Minister Jean-Claude Juncker, who chairs the Eurogroup of finance ministers, after the Friday night talks in Luxembourg.
“This has to be discussed in detail,” he said, indicating the issue will top the agenda at a two-day meeting of eurozone and EU finance leaders in Brussels on May 16 and 17.