Decision on third Greek bailout set for November

By on September 6, 2013
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The euro zone is likely to decide on a third bailout for Greece in November, after international inspectors finish an assessment of Greece’s struggles to carry out painful reforms, officials said on Thursday.

The International Monetary Fund and Greece estimate that Athens will need 10-11 billion euros in new financing in 2014- 2015 above what the euro zone and the International Monetary Fund have agreed to so far.

This is partly because euro zone central banks refused to delay repayment of Greek government bonds, contrary to an assumption by euro zone finance ministers, the Eurogroup, when they set up the current bailout.

Greece is still deep in its worst post-war slump, and the sale of state assets is well behind plan.

Greece has already had two international bailouts since 2010, and more money for it is controversial in Germany which has elections on Sept. 22. Voters there are tired of helping others after three years of the sovereign debt crisis.

Greece will not need any additional funds until the second half of 2014, but a decision must be taken in November at the latest because the IMF can only participate in the Greek bailout if the program is fully funded 12 months ahead.

“As far as the potential need for a third program for Greece is concerned, it’s clear that despite recent progress, Greece’s troubles will not have been completely resolved by 2014,” Eurogroup President Jeroen Dijsselbloem told the European Parliament on Thursday.

“It is realistic to assume that additional support will be needed beyond the program. In this context, the Eurogroup has indicated clearly that it is committed to providing adequate support to Greece during the current programme and beyond until it has regained market access,” he said.

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