Greece’s global lenders say it’s probable Greece will receive 8 billion euro ($10.9 billion) of assistance in early November, thus letting the distressed euro-zone nation avoid a near-term default.
The European Union, International Monetary Fund and the European Central Bank in a joint statement, said the fiscal 2011 deficit target “is no longer within reach,” due partly to a further decline in gross domestic product and also due to “slippages” in the government’s implementation of austerity measures. The government in recent weeks also announced additional actions to help make sure its fiscal targets in 2012 are met.
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The aid was originally set for release in October. Without the tranche, the government could possibly run out of cash in mid-November. The payout was delayed after Greece failed to meet 2011 fiscal targets.
Athens stated earlier this month that its 2011 deficit was likely to be down from 10.5% in 2010 to around 8.5% of GDP. Pressure appears to be growing on private bondholders to take write-downs on Greek debt exceeding the 21% haircut implied in the debt-swap plan that is part of the second bailout approved by European leaders on July 21.
Luxembourg Prime Minister Jean-Claude Juncker, was quoted saying to Austrian television that a “brutal” haircut for Greek bond holders can’t be ruled out, but he said any revised measure can’t contribute to contagion elsewhere in the euro zone.
In the interim, European Central Bank President Jean-Claude Trichet told the European Parliament that the euro-zone crisis “has reached a systemic dimension.”
16 of the euro area’s 17 members have accepted the EFSF changes. Slovakia’s parliament will vote Tuesday. Analysts think this will lead to the fall of the Slovak government but predict the changes to be approved later in the week.
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