Eurozone Ministers Delay Greece Bailout Installment Until October
Eurozone finance ministers delayed Friday a decision on paying out the next batch of emergency loans to Greece, pending a review of the nation's finances. Greece had been scheduled to receive an $11-billion installment from the first bailout at the end of September. The debt-heavy country has said it will run out of cash next month unless it receives the money. But the delay appears to have eased some concerns about a possible default by Greece, for now.
With the government's debt equal to about 150 percent of its gross domestic output, Greece could have serious problems making payments on its loans next month.
But European Union officials at a meeting in Poland said whether Greece receives the second portion of a $152-billion bailout package depends on its commitment to keep spending in check.
E.U. Economic Affairs Commissioner Ollie Rehn said, "Technically we have all the chances of taking a decision in the first part of October so as to disburse before mid-October for Greece, but really on the condition that Greece meets all the fiscal and other conditions. And now the ball is in the Greek court."
Worries that Greece might default on its loan payments have driven much of the recent turbulence in financial markets. But coordinated action Friday by European central banks to keep money flowing into the banking sector helped ease some of those concerns. That, and a new commitment from Europe's largest economy to secure the future of the euro, at all costs.
German chancellor Angela Merkel said, "Everything which needs to be done to keep the euro stable, needs to be done. Everything that goes against this aim must be avoided."
U.S. Treasury Secretary Timothy Geithner attended the meeting in Poland. He urged European leaders to act quickly - and warned that political wrangling over the debt crisis could make matters worse.
Bank analyst Mark Matthews said increasing pressure from the United States reflects the growing threat from a larger European crisis.
"So the implicit threat, I think, from the U.S. and the IMF is that 'if you guys don't sort your act out, you're taking down the whole world by not doing so' and they're basically threatening not to fund the bailout package," said Matthews.
Despite the lack of fresh action by European ministers, broader market shares in Asia and the U.S. rose on hopes that policy makers will be able to reach agreement on a bold plan to deal with the region's debt problem - before it's too late. |