French Finance Minister Baroin optimistic over EU Greek bailout deal
French Finance Minister François Baroin says European Union ministers have all the elements in place for the approval of a second financial rescue package for Greece on Tuesday.
The Greek parliament last week approved a series of measures worth 3.2 billion euros in return for a second bailout deal which would write-off 100 billion euros of debt and provide an EU loan of 130 billion euros.
“I hope that we …can take into account what has been done in the last several weeks, in the last several months even, by the Greek government and the political groupings that make up the coalition in power in Athens,” he said ahead of a meeting of eurozone finance ministers in Brussels.
Baroin stressed urgent moves were needed on Greece as it had bond repayments of 14.5 billion euros due on 20 March.
On Sunday US Treasury Secretary Timothy Geithner threw his weight behind the new austerity measures agreed by Greece and said the US backed the idea of a new IMF loan for Athens.
The International Monetary Fund which gave Greece a 30-billion-euro loan as part of the first bailout has so far remained silent over whether it will participate in a new loan.
What is on the table at finance ministers meeting in Brussels.
- Greece needs 130 billion euros as part of a rescue package to avoid going bankrupt in mid-March when it must make a bond repayment of 14.5 billion euros.
- The rescue plan, to be approved by the EU, would also write off 100 billion euros of debt with private lenders accepting a 70 per cent reduction in what they are owed. In return they will receive cash and new bonds set to mature in 30 years
What measures has Greece introduced to ensure the deal.
- The Greek parliament has approved a series of measures worth 3.2 billion euros. These include a 22 per cent reduction in the minimum wage and a 12 per cent cut to pensions of more than 1,300 euros a month.
- It has agreed to reduce the number of public sector workers by 150,000 by 2015.
- The government has agreed to open an ‘escrow’ account to ensure repayment to government creditors.
The current economic situation in Greece
- After five straight years of recession, Greece now has a debt greater than 160 per cent of its GDP. Figures released last week showed a five-year recession increasing to a seven per cent contraction in the fourth quarter, outracing an earlier estimate of 5.5 per cent for the whole of the year.
- Unemployment stands at 20.9 per cent rising to 48 per cent for young people. There has been a 25 per cent increase in homelessness over the past three years.