Greece confounds euro zone, Spain not seen seeking bailout

Mon Oct 8, 2012 6:40pm EDT
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By Robin Emmott and Jan Strupczewski

LUXEMBOURG (Reuters) - Euro zone finance ministers and the International Monetary Fund held a "thorough and robust" debate on Greece on Monday, but failed to make significant progress in deciding how best to get the country back on track with its bailout program.

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 program, with divergences emerging inside the eurozone and with the IMF over how best to proceed, officials said.

While Jean-Claude Juncker, the chairman of the eurozone's 17 finance ministers, and IMF Managing Director Christine Lagarde both said they were pleased with Athens' progress, they said more still needed to be done. Further discussion will take place once the troika report is published, probably next month.

"It was a thorough and robust debate," one euro zone official said describing in diplomatic terms a meeting that others said was at times intense and ultimately inconclusive.

One point of contention was whether to grant Athens up to two more years to meet its budget and other targets. While the IMF is believed to favor leeway, countries such as the Netherlands and Finland have concerns about offering more time.

"We were happy to learn that substantial progress has been made over the last weeks," Juncker told reporters after a five-hour meeting which also discussed Portugal, Spain, Cyprus and issues related to tighter banking supervision in the euro zone.

"We called on the troika and Greece to finalize their negotiations and agree on ways to close the fiscal gap for 2013 and 2014 as soon as possible," he said, adding that before any more money could be paid to Greece, it needed to "demonstrate its strong commitment" to its austerity program.

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 Juncker said Athens now had only until October 18 to complete the task.   Continued...

Spain's Economy Minister Luis de Guindos (L) talks with his Luxembourg counterpart Jean-Claude Juncker (R) during a meeting of the Board of Governors of the European Stability Mechanism (ESM) ahead of a eurozone finance ministers meeting in Luxembourg October 8, 2012. REUTERS/Yves Herman