The extra financing for Athens may come in the form of a bridge loan to cover a €3.1 billion bond entirely held by the European Central Bank, which matures on August 20, as the country faces the risk of running out of money by mid-August. Eurozone officials have hinted that Greece would be prevented from defaulting on this bond payment by receiving interim financing, but they haven't disclosed how the extra cash may be channelled to Athens.
Greek Finance Minister, Yannis Stournaras, said he had been given assurances at a meeting of eurozone and European Union finance ministers that Greece would get "some kind" of interim funding over the summer to cover the maturing bond.
Athens is scrambling to find and agree on savings of €11.5 billion for 2013 and 2014, before a delegation of inspectors from the European Commission, ECB and the IMF are due to return on July 24. In the past week, senior Greek officials have been locked in meetings searching for where they can save money with the least possible impact on austerity-weary Greeks.
Private sector economists forecast the Greek economy will contract between 6 per cent and 7 per cent this year. Earlier this year, the European Commission forecast a 4.7 per cent contraction. Prime Minister Antonis Samaras is scheduled to meet with Evangelos Venizelos, leader of Socialist party Pasok—part of the coalition government—and the leader of the small Democratic Left party, Fotis Kouvelis, on Wednesday to continue discussions on the austerity measures. Athens is blaming the steep downturn for a likely miss of this year's budget deficit target, and hopes to avoid the need for additional austerity steps for 2012.
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