Updated: Mon Feb. 20 2012 10:29:38
CTVNews.ca Staff
Eurozone ministers are expected to approve a multi-billion-dollar bailout for Greece Monday, although some issues remain to be sorted out, including what further measures may be necessary to bring down the country's debt load.
EU finance ministers are meeting in Brussels to hammer down the final details of the C130 billion bailout, which must be approved quickly to allow Greece to also finalize a C100 billion debt-relief deal with private investors.
Time is of the essence for Greece as the country faces default unless it makes a bond repayment deadline on March 20.
"If (Greece) doesn't get this money it doesn't have the cash to do that," CTV's London correspondent Ben O'Hara-Bryne said in an interview Monday. "So really the clock is ticking."
If Greece fails to pay back the bonds and is forced into bankruptcy, the embattled nation could be forced to leave the eurozone and return to its previous currency, the drachma.
French Finance Minister Francois Baroin told Europe-1 radio that while some details remain to be worked out, "the political commitments have been made" for the bailout package.
"We now have all the elements of a deal -- elements of a participation that remains voluntary for banks and private lenders, and for public lenders and central banks," Baroin said.
The Greek government passed a swath of austerity measures required by the eurozone, despite violent protests in the streets. It also agreed to carry on with the measures after general elections, which are scheduled for April.
Greece's Finance Minister Evangelos Venizelos arrived in Brussels Sunday night, and said he expects the bailout package to be approved.
"Greece comes into today's Eurogroup meeting having fulfilled all the requirements for the approval of the new program," he said. "For Greeks, this is a matter of national dignity and a national strategic choice and no other integrated and responsible choice can be opposed to it."
However, eurozone ministers are still looking for further concessions, including the creation of an escrow account through which the bailout money will flow. The eurozone ministers believe the account will keep Greece on track with its austerity program, because it would require that debt and interest payments be paid before public servants.
O'Hara-Byrne told CTV News Channel the account would amount to a "big loss of sovereignty" for Greece and, if it forms part of the bailout deal, could mean further protests on the country's streets.
But another outstanding issue of major concern is whether the current package will actually help Greece bring its debt levels under control.
Late last year, eurozone leaders and the International Monetary Fund both said the country's debt load should be brought down to about 120 per cent of annual economic output by 2020, down from the current 160 per cent.
However, a new report issued by the European Commission, the ECB and the IMF said the new package, austerity measures and the private debt-relief plan will still leave the debt load at about 129 per cent of economic output.
Eurozone officials could agree on further reductions to the interest rate on the first bailout package for Greece, which was C110 billion. As well, some national central banks in the eurozone that hold Greek bonds could participate in some form of debt relief by transferring the profits from those holdings back to Athens.
Finally, the eurozone ministers will also be discussing how much the IMF will contribute to the new package. The agency had put up about one-third of the money for bailouts for Portugal and Ireland, and more than a quarter for Greece's original bailout. However, it is expected that the agency's contribution this time around will be much lower.
"This is far from over," O-Hara-Byrne said. "This is a very difficult time for Greece. Five years they've been in recession and these cuts won't help them get out of it."
With files from The Associated Press
It's high time that Greece realize you cannot live your champagne socialist dreams on the backs of working people making beer wages in other European nations funding you. Greeks cannot keep affording to bust plates if they aren't paying for the dishes. Ooompah!
Parker Brown
The real unemployment in Greece has been high for decades. Successive governments have hidden the unemployment with government jobs and pensions. This has long prevented Greece from addressing the structural economic problem. Greece has never had a strong manufacturing sector; and is highly reliant upon Tourism and Merchant Shipping. Within the EU the Greeks have opportunities to work in other nations, and to expand their manufacturing sector. The Greeks have avoided these necessary actions. The fundamental lesson is that taxpayers should not vote for politicians that operate deficits. Electing politicians that promise lower taxes, but do not cut spending, is no different than electing politicians that promise programs without raising taxes to fund them. ( Half the deficit of Canadas present government is due to reduced government revenues. What is the difference?)
Another redneck Albertan
RedNeck Albertan nailed it. Isn't it funny how socialist countries always look at well organized, wealthy countries and want the same thing . What they don't understand is that in order to have all those things hard work is involved. All those amenities didn't just happen... they were earned though hard work. Sweden is the only exception and they had real wealth before they ever became socialist.
Bob T
This idea of putting the new loans into a seperate account that will be used to pay the interest on Greek debt is a good idea but it comes to late . Its time for Greece to leave the EU and to bring its currency back .This will make Greece more attractive to tourists and investors who can bring in Euro's to the country .
Redneck Albertan
After seeing the rapid recovery from disaster that the good people of Iceland experienced, it's a shame that Greece cannot leave the EU without creating a nightmare. The people of the poorer countries that joined the EU were sold a false bill of goods by their respective governments in that everyone thought they were going to become rich like Germany. What they weren't told is that to become German-rich, you would have to be innovative and hard working like the Germans, with responsible government. Didn't really work out...
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