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Greece bailout extension 'to cost 32bn euros more' | |
(about 2 hours later) | |
A draft document prepared for eurozone finance ministers suggests that Greece should be given two more years to meet budget goals, but that this will add 32.6bn euros ($41.4bn) to its bailout. | |
Eurozone finance ministers are meeting in Brussels to discuss new targets for Greece based on the report. | |
They will also discuss whether to release the latest tranche of funds but a decision is not expected on Monday. | |
Greece is pushing for the funds after passing a tough budget for 2013. | |
Greek PM Antonis Samaras has warned that without the new tranche of 31.5bn euros the country will run out of money within days. | |
'Smoother path' | |
The draft document on the pace of Greek economic reform was prepared by the so-called "troika" - the International Monetary Fund, the European Central Bank and the European Commission. | |
The troika has already pledged 240bn euros in bailout loans to Greece. | |
The two-year extension would give Greece time to achieve a primary budget surplus - a figure that would not include debt-financing costs. | |
The document says: "Our revised fiscal programme targets the 4.5% of GDP primary surplus target by 2016, two years later than foreseen. | |
It adds: "The smoother path will help to moderate the impact of fiscal adjustment on the economy." | |
The extension would cost an additional 32.6bn euros and comes with "very large" risks, the report says. | |
Those risks include the uncertain political support for the programme within Greece, the possible negative effect on the economy of the fiscal consolidation and possible court challenges to the measures. | |
The BBC's Chris Morris in Brussels says the original intention was for debt to be reduced to 120% of GDP by 2020 but that this is no longer feasible and a new target needs to be agreed by everyone. | |
He says this means more uncertainty, at a time when many Greek citizens believe they have taken all the austerity they can swallow. | |
Market fund-raising | |
Eurogroup chief Jean-Claude Juncker had earlier expressed optimism about the troika report. | |
"The basis is positive, because the Greeks have really delivered," he said. | "The basis is positive, because the Greeks have really delivered," he said. |
Greek MPs approved the 2013 budget, which includes further cuts to pensions and wages, in a vote on Sunday night. | Greek MPs approved the 2013 budget, which includes further cuts to pensions and wages, in a vote on Sunday night. |
More than 10,000 people joined demonstrations outside Greece's parliament to protest against the cuts. | More than 10,000 people joined demonstrations outside Greece's parliament to protest against the cuts. |
The passing of the budget was a pre-condition for Athens to be granted the next tranche of 31.5bn euros of EU/IMF loans necessary to stave off bankruptcy. | |
Greece faces a repayment deadline for 5bn euros of debt on Friday. | Greece faces a repayment deadline for 5bn euros of debt on Friday. |
However, German Finance Minister Wolfgang Schaeuble said it was unlikely the eurozone ministers would decide on the disbursement of the tranche at Monday's meeting. | |
The funding will have to be approved first by some parliaments, including Germany's. | The funding will have to be approved first by some parliaments, including Germany's. |
"We all... want to help Greece, but we won't be put under pressure," Mr Schaeuble told the weekly newspaper Welt am Sonntag. | "We all... want to help Greece, but we won't be put under pressure," Mr Schaeuble told the weekly newspaper Welt am Sonntag. |
On Tuesday, Greece will href="http://www.bbc.co.uk/news/business-20272997" title="link to news article" >make an urgent bid to raise funds from the financial markets in case it does not get the tranche of bailout money. | |
The national economy is expected to shrink next year by 4.5% and public debt is likely to rise to 189% of GDP, almost double Greece's national output. | The national economy is expected to shrink next year by 4.5% and public debt is likely to rise to 189% of GDP, almost double Greece's national output. |
This year, public debt stood at 175%. | This year, public debt stood at 175%. |
The head of Syriza, a left-wing opposition party, said the budget cuts would leave Greeks unable to afford essential goods this winter. | The head of Syriza, a left-wing opposition party, said the budget cuts would leave Greeks unable to afford essential goods this winter. |