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Updated: October 24, 2012 19:16 IST

Greece gets two-year extension on bailout

AP
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File Photo shows Greece's Finance Minister Yannis Stournaras. Greece has asked for a two-year extension on this deadline so that it has time to introduce austerity measures and labour market reforms.
AP File Photo shows Greece's Finance Minister Yannis Stournaras. Greece has asked for a two-year extension on this deadline so that it has time to introduce austerity measures and labour market reforms.

Greece’s Finance Minister Yannis Stournaras claims the country has been granted an extension from international rescue lenders to meet the terms of its bailout programme, signalling progress after weeks of talks to secure emergency loan payments.

One of the conditions of Greece’s current 240 billion bailout programme is that it reforms the economy so the country can return to the bond markets to raise money by 2014. Greece has asked for a two-year extension on this deadline so that it has time to introduce austerity measures and labour market reforms.

The government has recently been locked in negotiations with international creditors over a €13.5 billion ($17.56 billion) package of new austerity measures for the next two years.

Speaking in Parliament, Mr. Stournaras said on Wednesday said that Greece now had an extension to reform its finances, but gave no details.

“We have not gone bankrupt because we still have funds remaining from the previous instalment,” Mr. Stournaras told parliament.

“What have we achieved today? We have achieved the extension... If we had not been granted that extension, today we not only have needed to take measures worth €13.5 billion, but €18.5 billion ($24 billion),” he said.

In Berlin, Chancellor Angela Merkel’s spokesman Steffen Seibert reiterated that the German government cannot and won’t make a decision until it receives the troika report.

“There is no troika report so far and that’s why we have no basis to have discussion,” he told reporters in Berlin.

“We are waiting for the troika report with everything it will tell us about the facts and the data and then we make a decision,” he added.

Knowing the practical difficulties in deficit cuts German Chancellor
Angela Merkel had purportedly taken a soft stand on austerity. It was
clear that Germany will ignore the deficit reduction targets clamped
on Greece in exchange for more bailout loans, even prior to the Debt
Inspector’s Report. IMF had rightly considered granting two more years
to Greece to achieve the agreed targets.

Govt. of Greece must steer the economy for reforms so as to return to
bond market and raise sufficient corpus within the next two years. The
two years’ extension will enable to buy time for introducing austerity
measures. It is unbelievable why the spokesperson of Chancellor Angela
Merkel had expressed some sort of apprehension on Germany’s favourable
decision.

from:  Madan Menon Thottasseri. Chennai
Posted on: Oct 25, 2012 at 08:08 IST

Eurozone economic crisis have intensified problems mainly to the five
nations- Greece, Spain, Italy, Portugal, and Cyprus , while the total
debt of the 17 nations using the single currency have hit the highest
level since the launch of Euro in 1999.

It was really appreciable that Germany, the biggest economy amongst EU
nations, was the main reason for preventing the eurozone falling into
recession. Germany had insisted that countries with excessive public
debts have to focus on debt reduction measures, even if it adversely
affects the economy. The pace of austerity measures in countries like
Spain and Greece had proved to be counterproductive which deprived
governments of valuable tax revenue needed to cut debt. This issue was
the topic of debate in the meeting of European Union in last week.

from:  Madan Menon Thottasseri. Chennai
Posted on: Oct 24, 2012 at 23:42 IST
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