Story highlights
Greece may need to tap its eurozone partners for an extra 10 billion euros in funding
The country's finance minister said a new package would come without new conditions
Yannis Stournaras' comments come days after German's finance minister said the country would need help
However, Germany has an election on September 22 and any decision will likely be made after that
Greece may need to tap its eurozone partners for an extra 10 billion euros in funding as it faces up to a cash shortfall, the country’s finance minister has said.
Yannis Stournaras said “if Greece needs additional support that will be of 10 billion euros, which is a very small amount compared with the previous memorandums.” The comments were in an interview with Greek newspaper Proto Thema Sunday and reported by press agency AMNA.
A support package would come “without new conditions,” Stournaras said, as targets were already in place until 2016. Further, there would be no haircut on Greek debt, he said.
The minister said the country did not yet have the two conditions to return to the bond markets – a primary surplus and two consecutive trimesters of growth – but would know by year’s end if that had been achieved or could be next year.
Stournaras’ comments follow those made by German Finance Minister Wolfgang Schaeuble last week, in which he said Greece would require “another program” of assistance to help it with debt financing costs. Greece has already had bailouts worth 240 billion euros.
A Germany finance ministry spokesman said Schaeuble was referring to a eurozone pledge in late 2012 to consider “further measures and assistance” for Greece to help it achieve debt targets agreed to as part of the existing bailout program, which is due to end in 2016.
According to a note from Societe Generale economists, Schaeuble had recognized the obvious, “namely that Greece will need yet another assistance package.”
However, German Chancellor Angela Merkel “will want to keep discussions at bay until after the German election on 22 September,” economist Michala Marcussen wrote.
The International Monetary Fund had already recognized a funding gap of around 11 billion euros, Marcussen wrote, and more aid will be “top of the agenda,” after the election.
Further, the note added, Greece “in our opinion will need official sector debt forgiveness. Without this, we believe the economy will continue to struggle under the debt mountain, condemned to weak growth.”
Greece’s struggles come as Europe’s recovery appears to be gaining traction thanks to a revival in activity in Germany, the region’s biggest economy.
The 17-nation eurozone emerged from its longest ever recession, growing 0.3% in the second quarter after 18 months of contraction.
However, risks remain. France, the eurozone’s second biggest economy, saw private sector output fall faster in August than July, with both services and manufacturing taking a hit.
Unemployment rates have steadied but remain at record highs and will continue to weigh on consumer spending. It could also cause political instability in southern European states such as Greece and Spain.
Greece, along with three other eurozone countries – Portugal, Ireland and Cyprus – remain dependent on rescue loans from the EU and International Monetary Fund.
