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09 October 2012

Bloomberg: EU lauds Greek budget-cutting will, boosting aid prospects


European finance ministers saluted Greece's determination to trim its budget and reshape its recession-wracked economy, smoothing the way for German Chancellor Angela Merkel's trip to Athens with a commitment to keeping the country in the euro.

European officials paired the encouragement with a demand that Greece commit to a list of 89 policy steps before an October 18-19 leaders’ summit, and left open whether the next €31 billion loan instalment would be paid out in one go or dribbled out in smaller pieces.

“I’m impressed by the performance of the Greek government, by the willingness of the coalition parties in Greece to undertake whatever will have to be undertaken in order to respond to our wishes”, Luxembourg Prime Minister Jean-Claude Juncker said.

Juncker’s cheerleading and Merkel’s impending visit marked a show of support for Greek Prime Minister Antonis Samaras, who campaigned against deeper budget cuts, only to embrace them after taking office in July as the only way to keep Greece in the 17-nation eurozone.

Samaras’s coalition is deliberating internally and wrangling with the creditors to put together €13.5 billion in savings, the condition for unlocking the next set of loans from two packages totalling €240 billion.

Greece wants two additional years, until 2016, to meet the deficit-reduction targets set by creditors, Finance Minister Yannis Stournaras said. The extra time would create a “funding gap” of €12 billion that wouldn’t cost creditors anything because Greece could, for example, continue higher-than-planned sales of bills to fill the hole, he said.

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© Bloomberg


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