Greece may get more time to meet commitments
PAN PYLAS, Associated Press
Updated 3:45 a.m., Friday, September 14, 2012
International Monetary Fund (IMF) Managing Director Christine Lagarde, left, and Cyprus president Dimitris Christofias talk during their meeting at the presidential palace in capital Nicosia, Cyprus, Thursday, Sept. 13, 2012. Lagarde is in Cyprus for an Informal European economic and financial affairs council. Photo: Petros Karadjias / AP
NICOSIA, Cyprus (AP) — Greece may be given more time to meet its bailout commitments if the country's recession turns out worse than expected, but no more money will be provided by its euro partners, Dutch finance minister Jan Kees de Jager said Friday.
Arriving for the start of two days of discussions between Europe's finance ministers in the Cypriot capital, De Jager said Greece does not have much flexibility as it tries to get more time to achieve its budget cuts and reform measures required by its rescue lenders.
"If the deficit turns out to be somewhat worse than expected because of a temporary downturn in the economy, there could be some time but not money, not extra money," De Jager said.
Debt-crippled Greece has depended since May 2010 on international rescue loans, granted by its European partners and the International Monetary Fund, in return for a deeply unpopular austerity program.
The conservative-led Greek coalition government is seeking to get some of the austerity terms adjusted, as the recession is proving worse than anticipated at the time it was negotiated. In particular, he is seeking a two-year extension to meeting the budget reduction program to 2016.
However, many of Greece's euro partners are reluctant to give the country more time because it could mean additional funding for the crisis-hit country.
Greek Prime Minister Antonis Samaras, who is currently struggling to get an agreement on an €11.5 billion ($14.7 billion) package of spending cuts for the coming two years with the two leaders of his coalition government, says no new money will be needed, arguing that Greece could raise more short-term money in the markets and rework its current spending plans.
He has been trying to convince leaders around Europe that Greece needs "time to breathe" so the country can return to growth, that would make it easy to pay off debts.
Greece's last bailout package, worth around €130 billion, was agreed earlier this year but the money will only be handed over in the event it clears a series of hurdles.
The country is currently being assessed by debt inspectors to see what progress it is making and will be a key talking point during meetings on the east Mediterranean island.
Spain will also likely feature in the discussions through Saturday, which will also include European Central Bank president Mario Draghi and IMF chief Christine Lagarde.
Spain, also at the heart of Europe's debt crisis, will also likely is weighing whether to tap a new European Central Bank bond-buying plan.
This is the first gathering of euro finance ministers since Draghi announced the new plan, which has helped calm the mood in markets over the past few weeks.
"Spain is on the right track but will have to continue to convince the markets that it has sound policy for economic reform as well as budgetary austerity measures," De Jager said.
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Menelaos Hadjicostis and Nicholas Paphitis contributed to this story.
