* Source says principles of aid agreed, no amounts
* Paper reports euro zone agrees bailout plan for Greece
* German FinMin says unaware of such a plan
* European Commission says no deal has been concluded
* Rehn to seek new auditing powers for Eurostat in euro zone
(Recasts with EU source)
By Jan Strupczewski
BRUSSELS, March 13 (Reuters) - Euro zone finance ministersare likely to agree on Monday on a mechanism for aiding Greecefinancially, if it is required, but will leave out any sumsuntil Athens asks for them, an EU source said on Saturday.
Policymakers have been debating possible financial supportfor the heavily-indebted European Union member state for morethan a month, but have provided only words of support. Germany,key to any deal, has resisted appeals to promise aid.
British newspaper the Guardian on Saturday quoted sources assaying Monday"s meeting of the currency zone"s 16 financeministers would agree to make aid of up to 25 billion eurosavailable.
But a senior EU source with knowledge of preparations forMonday"s meeting told Reuters no numbers were likely at thisstage.
"I think we should be able to agree on principles of a euroarea facility for coordinated assistance. The EuropeanCommission and the Eurogroup task force would have the mandateto finalise the work," the source said.
"It would be the principles and parameters of a facility ormechanism, which then could be activated if needed andrequested.
He said no figure had been agreed.
"You would have a framework mechanism and you would haveblank spaces for the numbers because there has been no request(from Greece) yet," the source said.
Greece has announced steps to reduce its budget deficit thisyear to 8.7 percent of GDP from 12.7 percent in 2009, triggeringstreet protests and strikes but also reducing market concernover whether the country would be able to service its debt.
That helped Athens sell its bonds with ease on debt marketsearlier this month, but policymakers are still searching forways of making its cost of borrowing -- still far above that ofother Europeans -- more sustainable.
They are also concerned that the problems in Greece couldundermine confidence in the euro and spread to other heavilyindebted eurozone countries such as Portugal or Spain.
CUTBACKS
The EU source said that among the instruments considered tohelp Greece were both bilateral loans and loan guarantees.
"The preparations have been done under the Eurogroup bymember states and the Commission. The Commission has done muchof the technical work," the source said.
"The aim of the exercise so far has been to do the technicalpreparations, so that the political decision could be possibleon Monday. Germany holds the key at the moment."
Polls show that public opinion in Europe"s biggest economyGermany is strongly opposed to bailing out Greece, which has foryears provided unreliable statistics about the true size of itsdeficit and debt, breaking EU budget rules.
In a move that is likely to alleviate German concerns aboutspending money on Greece, the Commission has said it would soonmake a proposal for stronger economic cooperation between eurozone countries and tighter surveillance of their performance.
French Economy Minister Christine Lagarde told the WallStreet Journal she believed Greece"s austerity moves were behindthe improvement in its situation on markets and negated the needfor a bailout.
""There is no such thing as a bailout plan which would havebeen approved, agreed or otherwise, because there is no need forsuch a thing," she said.
But she added that "technical experts" at the EU have beenworking on a contingency plan, so that if the need arose "all wewould have to do is press the button."
The Guardian quoted a senior official at the European, theEU executive, official as saying the euro zone members hadagreed on "coordinated bilateral contributions" in the form ofloans or loan guarantees if Athens was unable to refinance itsdebts and called on the EU for help.
The agreement has been tailored to avoid breaking the rulesgoverning the operation of the euro currency which bar a bailoutfor a country on the brink of bankruptcy, and to avoid achallenge by Germany"s supreme court, the official said.
A German ministry spokesman said he could not believe thenewspaper"s report on the bailout plan was correct.
"We are not aware that this is being planned," he said,adding that Greece had not requested any aid. "Greece isimplementing its (savings) programme and we expect that it willmanage it alone." (Additional reporting by Tim Pearce in London, Pete Harrison inBrussels and Volker Warkentin in Berlin, Writing by Sarah Marshand Jan Strupczewski; Editing by Patrick Graham)
Currencies Bonds
No comments:
Post a Comment