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01 March 2012

FT: Eurozone delays half of Greece’s funds


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Eurozone members delayed approval of more than half of the €130 billion bailout for Greece after demanding that Athens show more proof that it would implement hastily-agreed spending cuts and reforms.


Finance ministers from the 17-country currency bloc meeting in Brussels signed off on funds to underpin a €206 billion restructuring of privately-held Greek debt. But they requested a “detailed assessment” by European Union and International Monetary Fund officials by next week of implementation of 38 specific measures before handing over the remaining €71.5 billion to Athens.

By in effect splitting the bailout into two parts, the eurozone has allowed hardliners in northern Europe to delay bailout funds even longer. Once the bond swap is completed, the risk of a Greek default on a €14.5 billion bond due on March 20 would disappear.

Some policymakers were optimistic that the full bailout would go through next week. Officials are expected to meet again on March 9 to give a final sign-off, a day after the debt swap is scheduled to be completed. “The Greek government and parliament has done everything required”, said one senior eurozone official, adding that the Greek results had been presented to ministers with a “health warning” that they wanted to clear up. “It’s not political, it’s rather technical.”

“We saw today that Greece has made a lot of effort and has made a lot of progress”, said Wolfgang Schäuble, Germany’s finance minister. The senior eurozone official added: “They got quite positive feedback even from the so-called hardliners”.

Full article (FT subscription required)



© Financial Times


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