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Greece needs more time to pay, IIF says
Greece should get cheaper rates on its 130 billion euro aid deal and
at least two more years from the European Union and International
Monetary Fund to repay them, the chief negotiator of the country's
private sector creditors said on Tuesday.
But better terms could
only come after Athens delivers on commitments it has made to fiscal
reform, Charles Dallara, managing director of the Institute of
International Finance (IIF), told a news conference while on a trip to
Beijing.
"Once that has been done, and I am confident it will be
done, Europe and the IMF should move quickly to extend the adjustment
period for at least two years and provide the modest additional
financial support for that extension to be effective,» Dallara said.
"Only
some 15-20 billion euros is needed. This can easily be realiζed in part
by reducing interest rates on the loans which Europe and the IMF made
to Greece on more concessional terms,» he continued, adding that
responses to the Greek debt crisis placed too much emphasis on
short-term austerity and not enough on improving the country's
longer-term competitiveness.
Greek Prime Minister Antonis Samaras,
leading a country in its fifth year of recession at a time of rising
discontent at home, earlier said he wants two more years to implement
economic reforms tied to the aid package to soften their impact.
Athens,
where Europe's debt crisis began nearly three years ago, has been
boosted by a decision to give Portugal - also the recipient of an
international loan package - more time to meet fiscal targets as
recession saps Lisbon's ability to deliver.
Under the revised
targets, Portugal has until 2014 to bring its budget deficit down to the
EU limit of 3 percent, ministers said in a statement on Friday.
Previously, the 78 billion euro package required a deficit of 3 percent
in 2013.
Inspectors from the so-called troika of the IMF, European
Commission and the European Central Bank (ECB) are evaluating Greek
progress on agreed targets before releasing the next, 32 billion euro
($41.3 billion) tranche from the giant aid package.
Cash-strapped
Greece must come up with nearly 12 billion euros of extra cuts for the
next two years to get the money, and it has fallen behind in reforms.
IMF Managing Director Christine Lagarde said last week that lenders may agree to some sort of extension.
But
Austrian Finance Minister Maria Fekter said in a newspaper interview
released on Sunday that Athens would get «a few weeks» more time to meet
terms of its international rescue. The idea of having a year or two was
dead and no extra money was on the table, she said.
Greece's
second loan deal envisages Athens returning to international markets by
2015, but with two consecutive parliamentary elections in May and June
after political parties struggled to form a coalition, the country lost
ground on its reform agenda. Deepening recession has also made the debt
targets less attainable.
Dallara welcomed the ECB's commitment
this month to launch a potentially unlimited bond-buying program to
lower the borrowing costs of struggling euro zone countries in a bid to
end the debt crisis, but said it was at risk of failure.
"The
announcement by the ECB was very bold on the one hand, but it will come
to naught, nothing, unless Spain or Italy ask for EU/IMF endorsement of
an economic program,» Dallara said.
"In the absence of a
governmental negotiation of a reform prograμ that is endorsed by the
European Commission, the massive potential support by the ECB will
remain just potential and will not materialiζe,» he said. [Reuters] |
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