Eurozone finance ministers to discuss Greek aid
Brussels • European Union officials will make a fresh try Tuesday to reach a political accord on desperately needed bailout loans for Greece an agreement that eluded them last week.
The discussion among the finance ministers from the 17 European Union countries that use the euro will center on a $40.2 billion loan. But when previously frozen aid is considered along with further aid scheduled to be disbursed later this year, the total could reach $56.15 billion, said a spokesman for eurogroup head Jean-Claude Juncker.
As he went into Tuesday's meeting, Juncker said Greece deserved the aid.
"It is clear that Greece has delivered but we still have to agree on the details," he said. "I expect the chances are good that we will come to an agreement tonight, agreed by all sides, but I am not completely sure about this."
The finance ministers had hoped to settle on the conditions for the aid last week. However, that meeting ended without agreement. That delayed the loan payment, pushing the country closer to bankruptcy and a possible exit from the euro.
Laboring under a mountain of debt and facing a gaping budget deficit, Greece has been relying since 2010 on international bailout loans, under terms supervised by the so-called troika the International Monetary Fund, the European Central Bank, and the European Commission, which is the 27-country European Union's executive branch.
To receive the aid, Greece has had to impose strict austerity and reform measures. Two weeks ago, the coalition government narrowly succeeded in passing a $17.25 billion package of budget cuts, tax increases and reforms in order to secure the latest loan payment. Weighed down by austerity, the country is mired in a deep recession heading into its sixth year, with more than a quarter of Greeks now unemployed.
The main aim of the bailout program is to right the country's economy and get it to a point where it no longer relies on international aid and can independently raise money on the debt markets.
The reform program attached to the bailout was supposed to steadily reduce Greece's debt to 120 percent of its annual gross domestic product a condition imposed by the IMF, whose consent is needed if the funds are to be released. The deadline for this target was 2020 but it's been clear for months that the country is way off track for achieving that.
Last week's meeting revealed disagreement on whether Greece should be given a two-year extension, to 2022, to reach the 120 percent target. The IMF is insisting that Greece stick to the original deadline.
The question of debt sustainability is as important as it is divisive: If Greece's debts can't be reduced to a level where the country can afford to pay them, the billions of euros in bailout loans given to Greece will have been wasted.
The 17 eurozone finance ministers in Brussels will try to hammer out an agreement on the conditions attached to the aid, but they will not be able to give final approval. Parliaments in some of the countries must first vote, after which the ministers will meet again on the issue.
Don Melvin can be reached at http://twitter.com/DonMelvin .