Athens wary of third rescue package

Athens wary of third rescue package

 

By Lefteris Yallouros – Athens

Greece is to be granted a third rescue loan by its international lenders, according to German weekly Der Spiegel which leaked a German Finance ministry document indicating Berlin has started preparations for the new package.

The new loan will be between 10 and 20 bln euros.

German Finance minister Wolfgang Schauble held talks last week with French counterpart Pierre Moscovici and EU, IMF and ECB figures in Brussels over the future of Greece’s economy and how to deal with the country’s huge public debt.

The meeting, revealed by Wall Street Journal, said to have taken place on the sidelines of the Eurogroup meeting, was not attended by Greek Finance minister Yannis Stournaras; howeverm the Greek side did say it was informed of the talks.

A funding gap of approximately 15 bln euros for 2014 and 2015 and stalled talks between Greece and the troika were discussed along with assistance needed in order to bring down the country’s debt which currently stands at 176 pct of GDP.

In an interview due to be published on Monday, Wolfgang Schauble insisted that any additional aid required by Athens would be “far smaller” than the 240bn euros it had received so far.

“What is sure is that any further aid would be much less expansive than whatever help has been given so far,” he is quoted as telling the German finance magazine Wirtschaftswoche.

Refusing to even mention a “haircut” on Greece’s debt – not to mention secret talks without the participation of Greece’s Finance minister – is considered a blow to the Greek government which fears a new rescue deal will almost certainly be followed by a new memorandum calling for further cuts and further taxes.

The achievement of a primary budget surplus in 2013 was hoped would be enough to see Greece’s international lenders agree to debt relief. With a fresh austerity program on the cards, Greece may be tempted to attempt to sell government bonds–possibly in the second half of the year–for the first time since the spring of 2010.

Greek officials and analysts in Athens have hinted at Greece following the footsteps of Ireland and Portugal. Ten year Greek yields have traded below 8 pct recently, still too high to realistically think about a debt issuance.

Another option Athens may try to push through is the tapping of funds from a bank rescue vehicle (which has a remaining capital buffer of about 10 billion euros) to partly cover its 2014-15 funding gap and avoid the third bailout package.