Greece Could Be Offered 2-Year Debt Respite

(EurActiv) — Eurozone finance ministers and the International Monetary Fund held a “thorough and robust” debate on Greece on Monday, with lenders considering giving the country two more years to reach its budget deficit reduction targets.

Ministers spent more than two hours discussing an upcoming report by the European Commission, the European Central Bank and the IMF – known as the troika – on Greece’s debt-reduction programme, with divergences emerging inside the eurozone and with the IMF over how best to proceed, officials said.

One point of contention was whether to grant Athens up to two more years to meet its budget and other targets, an idea first backed by Austrian Chancellor Werner Fayman. While the IMF is believed to favour leeway countries such as the Netherlands and Finland have concerns about offering more time.

The extra time could be financed without more money from the euro zone, Greek Finance Minster Yannis Stournaras said.

“It is now on the table by all members of the troika,” Stournaras told reporters of the 2-year extension. “All the excercises that we are doing now they assume that the programme will last up to 2016, that … 4.5% of GDP [for the budget deficit] will be achieved in 2016 rather than in 2014,” he said.

“The implicit assumption is that the programme will be extended despite the fact that it remains extremely frontloaded,” he said. Asked whether this means that no more additional money from the EU is needed, he said: “Yes, that is my view.”

“We have just started discussions, there is no decision yet,” he said when asked about the views of other finance ministers.

Extending the programme by two years would create a funding gap of about €12 billion, which could be covered by €8 billion the International Monetary Fund had set aside in case of a deeper than expected recession, Stournaras said.

Greece could also benefit from “substantial interest savings” as a result of lower borrowing costs of the EFSF bailout fund, he added.

In March, the troika agreed on 89 “prior actions” that Greece must take to get its budget deficit down and overhaul its economy. Most have already been achieved, but Eurogroup chair Jean-Claude Juncker said Athens now had only until 18 October to complete the task.