European Union delays new loan for Greece

[News_Editor]

European Union delays new loan for Greece

2011-06-21 04:14:27 GMT+7 (ICT)

BRUSSELS (BNO NEWS) -- The European Union on Monday delayed setting the main parameters of a clear financing loan to Greece until it introduces further austerity measures.

The ministers said that the decision to allocate a new 12 billion Euro ($17 billion) loan to Greece will be delayed until early July in order to give the Mediterranean country time to pass key laws on the fiscal strategy and privatization by the Greek Parliament.

In addition, the European Union recognized the considerable progress achieved by Greece over the last year, particularly in the area of fiscal consolidation, as well as the challenges that its citizens are facing due to the situation.

The ministers urged Greek authorities to stick to the agreed fiscal consolidation path, the plans of collecting 50 billion Euros ($71.53 billion) in privatization proceeds until 2015, and the structural reform agenda to promote medium-term growth in order to tackle the debt.

The EU and Greece will sign an updated Memorandum of Understanding in the coming days that will reflect the latest negotiations between Athens and the Commission, as well as in liaison with the European Central Bank (ECB) and the International Monetary Fund (IMF).

The Commission stressed that given the difficult financing circumstances, Greece is unlikely to regain private market access by early 2012. Furthermore, additional funding will be needed from both official and private sources as well as the pursuit of voluntary private sector involvement in the form of informal and voluntary roll-overs of existing Greek debt.

On Friday, France and Germany voiced their support to the Greek government for its ambitious reform and austerity measures despite the mass protests across the Mediterranean country against such initiatives.

Thousands of people gathered in Athens' Syntagma Square last week, just in front of the country's Parliament, clashing violently with police forces. Greece's largest labor unions joined on Wednesday to hold a 24-hour strike, which affected public services including hospitals and health clinics, public transportation, and mass media broadcasts.

Greece is in need of a second bailout to avoid bankruptcy as the first one failed to stabilize its finances. Greek Prime Minister George Papandreou has struggled to reach a consensus within his Parliament on a new bailout deal. Opposition parties have strongly rejected the Premier's efforts and instead demanded a renegotiation of the bailout terms.

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