Third aid ‘on way’ for Greece

FRANKFURT/AHRENSBURG - Reuters

An elderly man carries shopping bags at Athens’ central fruit and vegetable market. ‘There will have to be another programme in Greece,’ German Finance Minister Schaeuble said. AP Photo

German Finance Minister Wolfgang Schaeuble said more explicitly than ever before that international lenders will have to offer Greece a third aid program.

“There will have to be another programme in Greece,” Schaeuble said at an election campaign event in northern Germany yesterday. He reiterated the government’s stance, however, that there will be no debt haircut for Athens.

Schaeuble has said in the past that international lenders may have to consider a new aid program for Greece after the current one expires at the end of 2014, but he has never described this as inevitable, as he appeared to do on Aug. 20.

Earlier this month, the German government, one of Greece’s biggest creditor, dismissed a report by Der Spiegelmagazine, which quoted a document that said Europe “will certainly agree a new aid programme for Greece” and that the existing aid package carried “extremely high” risks.

Opposition parties, notably Social Democrat (SPD) challenger Peer Steinbrueck, have accused Chancellor Angela Merkel of covering up the risks that German taxpayers will have to fund further eurozone bailouts, which out starin on her ahead of September elections.

Schaeuble’s remarks came a day before European Central Bank Executive Board member Joerg Asmussen’s today’s Greece visit to discuss progress on reforms needed to ensure more bailout money, as the ECB said.


On track

Greece got an aid tranche of 5.8 billion euros ($7.75 billion) from its international lenders - the euro area, its national central banks and the International Monetary Fund - in July and stands to receive another 1 billion euros in October, subject to implementation of further reforms.

The international lenders, known as the troika, will return in Athens in the autumn to find out whether the government needs to find further savings to meet its 2015-2016 budget targets.

“In the run-up to the next troika review mission, ECB Executive Board member Joerg Asmussen will visit Athens for bilateral meetings with Greek policy makers and representatives of society and the business community to discuss the Greek adjustment programme and wider euro area developments,” the ECB said in an emailed statement on Tuesday.

Asmussen will meet Central Bank Governor George Provopoulos, Finance Minister Yannis Stournaras and George Zanias, chairman of Greece’s biggest lender, National Bank, Greek sources told Reuters.
Progress on reform in the recession-stricken country has been patchy and there have been several reports thatGreece may need another aid package or more debt relief to get back to a more sustainable financial position.

German Economy Minister Philipp Roesler said at the time that Greece was absolutely going in the right direction. This message was echoed by France’s Finance Minister Pierre Moscovici on Tuesday. “It seems to me that this programme is on track,” Moscovici told Inter radio. “I don’t see an urgent need for a new aid plan for Greece.”