No final decision on Greece next week, slower austerity assumed

Fri Nov 9, 2012 11:18am EST
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By Jan Strupczewski

BRUSSELS (Reuters) - - Euro zone finance ministers are unlikely to release a new tranche of loans to Greece on Monday as there is no agreement yet on how to make its debt sustainable but Athens is set to get two more years to cut debt, officials said.

Euro zone finance ministers, called the Eurogroup, meet on Monday in Brussels where the main topic of their discussions will be unfreezing lending to Greece, held up after Athens went way off track with promised reforms and fiscal consolidation.

Even though Greece passed a structural reform package in parliament on Wednesday and is to vote through an austerity budget for 2013 on Sunday, the ministers are not in a position to make a final decision.

"There is a very, very high ... probability of a second round of discussions to finalize everything," a senior EU official said.

The ministers will analyze all the reform commitments Greece will have made by then via parliamentary votes, to judge whether an austerity programme promised in exchange for the loans was back on track.

Key to a final agreement is an analysis of how to make Greek debt, which is forecast to reach almost 190 percent of GDP next year, sustainable again after the country's spendthrift ways started the euro zone sovereign debt crisis in 2010.

International lenders -- the International Monetary Fund, the European Commission and the European Central Bank, called the troika -- cannot yet agree on the way to do that.

Estimates of the debt level by 2020 differ by 10-20 percentage points, officials have told Reuters.   Continued...

Workers maintain the huge Euro logo next to the headquarters of the European Central Bank (ECB) in Frankfurt, December 6, 2011. REUTERS/Ralph Orlowski