ATHENS Aug 21 The European Central Bank was
checking up on how well Greece is meeting its international
bailout obligations on Wednesday, a day after Germany's finance
minister said a third aid programme would be needed to keep
Joerg Asmussen, a member of the ECB's executive board, was
to meet Greece' prime minister, finance minister and central
bank governor, and to have talks with Greek business leaders.
His immediate concern is with the next tranche of aid from
Greece's second international bailout, due in October.
But his visit was announced the same day that German Finance
Minister Wolfgang Schaeuble told an election campaign audience
that Greece will need a third bailout on top of rescue loans
worth about 240 billion euros already obtained for 2010-2014.
A Greek finance ministry official speaking to Reuters on
condition of anonymity said any further help for Greece would
aim to cover its funding shortfall in 2014-2016 and would be
much smaller than the previous aid packages, given the country's
limited funding needs for the period.
The International Monetary Fund has put Greece's uncovered
funding needs for 2014-2015 at 10.9 billion euros. At least part
of that shortfall stems from national European central banks
refusing to roll over part of the Greek bonds they hold.
Such estimates are revised frequently and are highly
sensitive to budget and economic growth projections, which
Greece's lenders are expected to update in the fall.
WHAT KIND OF BAILOUT
Greek officials have suggested any such funding shortfall
could be covered with a combination of new rescue loans, or debt
support measures like extending maturities or cutting interest
rates on loans, as already envisaged under a euro zone decision
on Greece last year.
This was what European Union Monetary Affairs Commissioner
Olli Rehn was pointing to when cited on Wednesday as saying that
while new rescue loans in a third bailout were possible, they
were not the only option to help Greece.
"(Greece's) debt sustainability can be improved for instance
by extending the loan periods (on existing rescue loans),"
Finnish daily Helsingin Sanomat quoted Rehn as saying
The aid programme Schaeuble is expecting will be at least
partly financed via the EU budget, German newspaper Sueddeutsche
Zeitung cited unnamed sources as saying.
Greece's international lenders - the EU, ECB, and IMF, known
as the troika - are due to return to Athens in the autumn to
reexamine whether Greece's debt is on sustainable footing and
whether the government needs to find further savings to meet its
2015-2016 budget targets.
Progress on reform in the recession-stricken country has
been patchy. Tax revenues continue to lag targets and the Greek
economy has struggled to show signs of recovery after shrinking
by about a quarter from its peak six years ago, mainly as a
result of austerity policies imposed under two bailouts.