Greece will “very likely” need more financial aid beyond its current rescue loan programs, which end next year, the chairman of the eurozone finance ministers’ meetings acknowledged on Thursday.
Greece has been kept out of bankruptcy since 2010 with rescue loans worth 240 billion euros ($316 billion) from its eurozone partners and the International Monetary Fund. The possible need for further aid has proven a politically toxic issue in creditor countries like Germany.
“It’s clear that despite recent progress, Greece’s trouble will not have been completely resolved by 2014,” Jeroen Dijsselbloem told lawmakers in the European Parliament.
The main conditions are for Greece to achieve an annual primary budget surplus that is, before the cost of servicing its debt plus the full implementation of reforms Athens has agreed to in return for its bailout loans, he said.
“Further progress is needed, specifically in the field of public sector reform and tax administration reform,” he said.
Mr. Dijsselbloem, who is also the Dutch finance minister, said the 17-nation eurozone has made clear it stands ready to assist Greece further, possibly by again reducing the interest rates on the bailout loans, until Athens is able to refinance itself again on financial markets.
The IMF estimated in July that Greece faces a financing shortfall of about 11 billion euros ($14.5 billion) through 2015. Mr. Dijsselbloem, however, declined to estimate Greece’s additional financing need, saying “speculation at this stage isn’t helpful.”
“It’s much too early to talk about the character of a new program, the size or the conditions of a new program,” Mr. Dijsselbloem insisted.
Many analysts maintain Greece’s debt load will still be unsustainably high at the end of the program, possibly requiring eurozone lenders to forgive some of their loans to Greece.
Greece had to seek international rescue loans in May 2010, when the dire state of the country’s public finances left it unable to borrow on international bond markets. To qualify for the loans, Greece pushed through repeated rounds of austerity measures, slashing state spending, cutting state sector salaries and pensions and increasing taxes across the board.
The government has just reached a primary budget surplus, but unemployment has reached 27 percent as the country struggles through its sixth year of recession.