BRUSSELS, July 26 New loans for Greece or an
early return to debt markets with a short-term bond are likely
to be among options discussed by lenders to cover a 3.8 billion
euro funding gap next year in the country's bailout, a senior EU
The government in Athens and its troika of international
lenders from the European Union, European Central Bank and
International Monetary Fund will discuss the supplementary
financing options in a few months' time, the official said.
"There are various ways in which this gap could be closed.
Either member states provide new loans, (or) ...not all the
funds that are currently in the programme are needed, (or)...
later next year if Greece might be able to return to the markets
and actually issue short term bonds," the official said.
"I think there are various ways in which this gap could be
closed and that will have to be discussed in the autumn."
The gap will appear in the second half of 2014 because, when
the current programme was designed late last year, euro zone
policymakers had expected eurozone central banks to roll over
their holdings of Greek bonds maturing during the bailout.
But euro zone central banks believe that this would be seen
as monetary financing of government borrowing, which is
forbidden under European Union law.
"Therefore we no longer count there will be such a
roll-over," the official said.
Euro zone officials will discuss ways to close the gap after
the summer break at the end of August.
Another option, mentioned previously by the EU Commission,
could be to spend unused bailout money initially earmarked for
bank recapitalisation in Greece.
The official said the amount that might be available from
the bank recapitalisation envelope would only be known early in
2014, when a review of banks' capital needs and a stress test of
their assets ends.
Greece might consider trying to borrow from the market again
because its fiscal consolidation efforts might turn out to be
ahead of plan. The country was due this year to reach a primary
fiscal balance - which excludes the cost of servicing its debt -
and a primary surplus in 2014.
"Fiscal consolidation is on track so I would not rule out
that there may be a small primary surplus already this year so
that Greece over achieves its target," the official said.
Euro zone finance ministers promised that if Greece reaches
a primary surplus and meets all other conditions of the bailout,
they would consider further help to make sure the country's debt
falls substantially below 110 percent of GDP in 2022.
According to a Eurogroup document from last December, this
was to include a further interest rate reduction on bilateral
loans extended to Greece under its first bailout and cutting the
Greek contribution to EU-funded projects in Greece.
Some in Greece believe further help may mean forgiving some
of the bailout loans, because most of the Greek debt is now with
euro zone governments and institutions.
But the official said any discussions on Greek debt could
only take place in April next year, when the EU's statistics
office publishes 2013 debt and deficit numbers.
"A discussion on debt should happen next April. The
Eurogroup does not speak of debt relief but of further support,
if it is needed and if all conditions are met," the official