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Euro-zone countdown for Greece: Germany and IMF will not yield on austerity measures

Monday, July 23rd 2012 - 08:41 UTC
Full article 2 comments
PM Antonis Samaras going through a “great depression” like the US in the thirties PM Antonis Samaras going through a “great depression” like the US in the thirties

German Finance Minister Wolfgang Schaeuble warned Greece in a newspaper interview Monday that it must redouble efforts to comply with bailout conditions imposed by international creditors. “If there were delays, Greece must make up for them,” he told the daily Bild.

He declined to predict whether Greece would remain in the Euro zone and said he would wait for new findings from the European Union, International Monetary Fund and the European Central Bank -- the so-called troika of Greek lenders.

“I will not pre-empt the troika. When the troika report is ready, the Euro group will meet,” he said, referring to Euro zone finance ministers.

Schaeuble said he saw few parallels between the plight of Greece and fellow debt-mired country Spain, for which the Euro group approved a bank aid package of up to 100 billion Euros on Friday.

“The causes for the crises in both countries are completely different. Spain's economy is must more competitive and has a different structure. The country will get back on its feet quickly,” he said.

Auditors from the troika of Greek creditors are expected in Athens this week for an in-depth inspection of the new government's economic program. Their report will determine whether Greece will receive fresh loans of 31.5 billion euros by September due under its debt rescue programme.

Highlighting growing frustration with Athens, German magazine “Der Spiegel” reported on Sunday, without citing sources, that the IMF may not take part in any additional financing for Greece.

Officials have already indicated there would be a shortfall on the current bailout. How much is likely to depend on the extent by much Greece misses its fiscal targets and the extent of support needed to keep its major banks afloat.

Greece is in a “Great Depression” similar to the American one in the 1930s, the country's Prime Minister Antonis Samaras told former US President Bill Clinton on Sunday.

Greek GDP is expected by the end of this to have shrunk by about a fifth in five consecutive years of recession since 2008, hammered by tax hikes, spending cuts and wage reductions required by two EU/IMF bailouts. Unemployment climbed to a record 22.6% in the first quarter.

“You had the Great Depression in the United States,” Samaras told Clinton, who was visiting Greece as part of a delegation of Greek-American businessmen. “This is exactly what we're going through in Greece - it's our version of the Great Depression.”

Athens must reduce its budget deficit below 3% of GDP by the end of 2014, from 9.3% of GDP in 2011, requiring almost another 12 billion Euros in cuts and higher taxes on top of the 17 billion successive governments have cut from the budget shortfall.

Greece wants its lenders to give it two more years to achieve the budget goal to avoid an even deeper economic slump but its lenders have opposed the idea because it would imply an even bigger financial aid to the country.
 

Categories: Economy, Politics, International.

Top Comments

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  • British_Kirchnerist

    My prediction - the troika will take New Democracy's victory as a green light for more austerity, Samarras will buckle and implement it, the people won't put up with it an Syriza will come to power at the next election which won't be a full 4 years from the last

    Jul 23rd, 2012 - 02:07 pm 0
  • Conqueror

    Greece will be the first EU member to revert to its original currency. In a few years, it will claim back its self-respect and realise that the euro-dream was just a dream. Other countries such as Portugal, Ireland and Italy will watch this and realise that the euro was a con-job. Only a short step from there to realising that the EU is a con-job that the people don't want. Quite possibly led by Britain, members will start leaving the EU. Possibly leaving France, Germany and the East European countries who reckon it's a way to leach money from richer countries.

    Jul 23rd, 2012 - 02:48 pm 0
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