November 12, 2012 / 4:55 PM / in 5 years

Greece to need extra 32.6 bln euros if budget target pushed back 2 yrs-draft

BERLIN, Nov 12 (Reuters) - Greece will need 32.6 billion euros in extra financing if the country reaches its primary budget surplus target of 4.5 pct of GDP in 2016, two years later than originally planned, a draft document prepared for euro zone finance ministers showed.

“To close the financing gap for the period through 2014, additional programme financing of somebillion is required in the short-term compared to the March 2012 assessment,” the report said.

The compliance report was drafted by the International Monetary Fund, the European Central Bank and the European Commission and will be the basis of discussions of euro zone finance ministers this week on unfreezing emergency lending to Athens.

“Owing to lower than expected privatisation proceeds, additional official financing ofbillion would be required to close the financing gap for the period through 2014,” the report, obtained by Reuters said.

“The two-year extension of the fiscal adjustment path increases the funding gap for the period up to 2014 by billion tobillion,” it said.

“Financing needs for the Greek sovereign have to be increased also for the period 2015-16 given the higher debt profile, but also as access to capital markets remains uncertain,” it said.

The report said that even though the perception of the overall policies and credibility of the government could improve significantly after two years of successful programme implementation, it would be prudent to assume that markets may remain sceptical about Greece for a longer period, given the vulnerability resulting from the high debt ratio and political risks.

“Additional financing needs for 2015-16 amount to billion if the originally scheduled fiscal adjustment path is maintained and toif the fiscal adjustment path is extended by two years,” the report said.

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