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Greece bailout extension 'to cost 32bn euros more' | Greece bailout extension 'to cost 32bn euros more' |
(about 4 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. | 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 have met in Brussels to discuss new targets for Greece based on the report. | |
The ministers also delayed a decision on whether to release the latest 31.5bn euro tranche of bailout funds. | |
They said they would meet again to discuss the issue on 20 November. | |
Greece has been pushing for the funds after passing a tough budget for 2013 on Sunday. | |
Greek PM Antonis Samaras has warned that without the new tranche the country will run out of money within days. | |
But the eurozone ministers said Greece needed to implement a "few remaining" prior actions to allow the process to move forward. | |
'Smoother path' | '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 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 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 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. | 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." | 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. | 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. | 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. | 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. | 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 | Market fund-raising |
Eurogroup chief Jean-Claude Juncker had earlier expressed optimism about the troika report. | 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. | 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, eurozone ministers had indicated it was unlikely a decision on the disbursement of the tranche would be made at Monday's meeting. | |
The funding will have to be approved first by some national parliaments, including Germany's. | |
"We all... want to help Greece, but we won't be put under pressure," German Finance Minister Wolfgang Schaeuble told the weekly newspaper Welt am Sonntag. | |
On Tuesday, Greece will make an urgent bid to raise funds from the financial markets in case it does not get the tranche of bailout money. | On Tuesday, Greece will 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. |