Daniel Ritort

A third Greek bailout may be needed

Lucas Papademos at Parliament of Greece

Lucas Papademos at Parliament of Greece

Greece has received the biggest bailout in history but another lifeline could not be ruled out.

Lucas Papademos, Prime Minister of Greece, stated that Greece could require a third bailout.

Papademos said that some financial assistance might be necessary but Greek government has to work intensely to avoid such an event.

He also argued that Greece may require a third bailout due to a deeper than expected crisis. His statement came only few weeks after Greece secured a second package of rescue funds following months of hard-wringing in the European Union.

The European Union and International Monetary Fund have committed a total of 240,000 million Euros to Greece in a bid to avoid its bankruptcy and subsequent euro exit.

Papademos is currently working on further spending cuts. He told to Greek parliament today that whatever government emerged after forthcoming general elections it is vital that it prepared for the measures.

In his opinion, in 2013-2014, a reduction in state spending of about 12,000 million Euros is required under the new economic programme. He added that every effort must be made to limit wasteful spending and not to further burden salaries of civil servants.

Greek official sources said the prospect of further aid would be given if Greece is unable to service its debt by borrowing on international markets. Greece has been locked out of markets since first seeking international aid in May 2010.

Papademos stressed that a third bailout would be dealt if Greece enforced all the reforms being demanded by its troika of creditors at the European Union, European Central Bank and International Monetary Fund, it remained far from certain that it would be able to access capital markets by 2015, when the country’s latest financial support program ends.

He argued it is difficult to foresee market conditions and expectations in 2015.

Papademos said to Greek parliament that after latest write-down of Greek debt, the Greek economy would begin to rebound in 2013.

The bond swap has sliced around 95,000 million Euros from the country’s 360,000 million debt with an additional 12,000 million expected to be erased when, completing the restructuring, coupons governed by foreign law are exchanged next week.

Insiders said the new government emerged after general elections will ave about 60 days to enact long-overdue structural reforms and agree on ways of reining in public debt before troika officials make a crucial inspection tour of Greece next June.

Papademos aide stressed it is very important that there would not be let up in the pace of reforms after elections.

Earlier this week, the chiefs of both the European Union and International Monetary Fund missions to Greece said while progress had been made meeting deficit-reducing targets, much remained to be done.

Matthias Mors, head of European Union monitor, stated there are still many measures to be taken, painful ones too. And added they will be able to see in the second half of 2012 in which direction Greece is going, whether it is on the right path or not.

Poul Thomsen, supervisor at International Monetary Fund to Greece, was tougher still and predicted that economic recovery for the debt stricken country would take at least a decade.

Tags: , , , , , , , .
  • Trackbacks
  • Comments
    • [...] said recently it was too early to talk about new funding. But Schaeuble told an election rally that there will have to be another program in Greece. Germans are uncomfortable with the size of European country bailouts, for which they pay the [...]

    • [...] He argued that the two big Cypriot banks are insolvent if there are no emergency funds from the European Central Bank. Cyprus’ banks were badly exposed to Greece, which has itself been the recipient of two huge bailouts. [...]

    • [...] Central Bank lent the money amidst fears that Greece, which needed two international bailouts, could default on its huge debts. At the same time, many investors thought the huge economies of Spain and Italy may be next to [...]

    • [...] said this is a significant upgrade, which the Greek government will consider a vote of confidence, but it seems to be more of a vote of confidence in the Euro in general. They also said Greece is [...]

    • [...] The Greek government has been negotiating with representatives of the European Union, The European Central Bank and the International Monetary Fund about signing off the release of more money from the 130,000 million Euro rescue package, the second multi-million Euro bailout that Greece has been granted. [...]

    • [...] zone was two-and-a-half years ago when they had no instruments of crisis management, they had to create the Greek loan facility and the temporary European facility, they are moving forward and they are supplementing the [...]

    • [...] said the bigger question remains whether the Spanish government will have to follow Greece, Portugal and Ireland and request a full international bailout, involving loans that have to be [...]

    • [...] this morning, Wolfgang Schaeuble, Finance Minister of Germany, ruled out a third package of aid for Greece, but stressed that it would be staying in the euro zone. He said the costs for Greece are already [...]

    • [...] Greece needs the funds to make repayments on its debt burden. A default could result in the country leaving the Euro. [...]

    • [...] Economists calculate that Greece may need a third rescue package worth up to 50,000 million Euros. [...]

    • [...] a German newspaper, reported that the International Monetary Fund has told the European Union it will provide no additional funds for [...]

    • [...] Euro zone finance ministers are meeting in Brussels to discuss the situation in Greece and Spain. The undermining factor is against the future of the euro zone. [...]

    • [...] Samaras, leader of New Democracy, said he would form a national salvation government to keep the country in the euro. But he added he would seek to amend Greece’s controversial bailout agreement with European Union [...]

    • [...] said that even then, it is probably not big enough for the worst the euro zone could face. The money is not specifically tied to the euro crisis and it is certainly not for the exclusive [...]

    • [...] Now, there are more than 350,000 people out of work in Greece than a year earlier, when the unemployment rate was at 14.8 percent. Analysts said that Greece is in the midst of a deep recession that began in 2008. [...]

Leave a Reply

*

  • Categories

  • Archives

    • 2014 (11)
    • 2013 (398)
    • 2012 (420)
    • 2011 (294)
  • Tags

  • Advertisements