February 14, 2012 / 6:06 PM / 8 years ago

Eurozone ministers eye February 20 meeting on Greece

BRUSSELS (Reuters) - Eurozone finance ministers abandoned a plan to gather on Wednesday to discuss aid for Greece and instead decided to talk by phone as they continued to grapple with unresolved problems over a financial rescue plan.

Greece needs a second package of financial aid to save it from disorderly default.

But its political leaders have so far failed to deliver sufficient commitments to economic reform, Eurogroup President Jean-Claude Juncker said in a statement on Tuesday.

“It has appeared that further technical work between Greece and the troika is needed in a number of areas, including the closure of the fiscal gap of 325 million euros in 2012 and the debt sustainability analysis,” Juncker said in a statement.

“Furthermore, I did not yet receive the required political assurances from the leaders of the Greek coalition parties on the implementation of the program,” he said.

The delay, which is likely to worry investors who had expected a deal on Wednesday, is the latest setback in difficult negotiations to prop up Greece’s finances.

After months of negotiations, private creditors agreed to take losses on their Greek bonds but only in conjunction with a rescue package for Greece.

But the Greek parliament’s approval of an austerity bill on Monday resulted in violence throughout the country, and opposition politicians - who might end up in power after elections in April - have said they may renegotiate how reform is implemented.

The Greek government is attempting to find 325 million euros ($427 million) in budget cuts to satisfy euro zone finance ministers.

Eurozone ministers had been expected to meet in person on Wednesday in Brussels to give their initial approval to the package, as well as agree to launch a bond swap with private creditors to reduce Athens’ debt burden.

The delay pushes back a decision until at least Monday, February 20, when ministers have scheduled their next meeting.

The further technical work remaining needs to be carried out by the troika that monitors Greece, consisting of the European Central Bank, European Commission and International Monetary Fund.

The savings of 325 million euros are part of reforms that will involve 3.3 billion euros of cuts in wages, pensions and jobs endorsed by parliament on Sunday. During the vote rioters torched buildings in Athens and fought running battles with police.

A written commitment from Greece’s main political leaders is crucial to winning the blessing of Germany and others for a 130 billion euro package of aid that Athens needs to be in place in time for a 14.5 billion euro bond redemption repayment on March 20.

Without it, euro zone countries will not launch a program of aid, which is also needed to pay the private owners of Greek bonds to encourage them to participate in a bond swap to cut Athens’ debt burden.

Frustration with Greece peaked in recent weeks as politicians began preparing for national elections that could come in April.

This especially worries countries such as Germany, which fears that Greece’s leaders will abandon the pledges they have made to reform the economy as soon as they have received the financial aid they need.

Reporting By John O'Donnell.; Additional reporting by Luke Baker and Martin Bratislava.; Editing By Sebastian Moffett and Myra MacDonald

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