Luc Coene, an executive at the European Central Bank, warned that Greece will need additional help to balance its budget, Reuters reports. Coene, the governor of Belgium’s central bank, was optimistic that the future of the eurozone was no longer in question, claiming that the worst of the crisis is in the past.
However, he highlighted Greece’s need for between 10 and 11 billion euros to balance its budget in the second half of 2014 as evidence comes to light that now was not the time for inaction. Especially concerning in Coene’s radio interview was his referral to a potential fourth Greek bailout, saying that, “We will need to make further efforts, certainly once, perhaps twice more. We will see how the situation develops.”
Although Greece would not need the first new batch of money for over another year, action on the legal side must begin far earlier, especially if the International Monetary Fund is involved, Reuters reports. Since the IMF requires backing of the funding a full year in advance to become involved in the bailout process, the eurozone will have to make a decision on the matter by this November. The timeline was accelerated from initial estimates when some European banks refused to delay repayment of Greek government bonds.
Reuters also covered a preliminary statement of Greece’s finances for the year 2013 that was delivered to the public yesterday. In the statement, Greece claims to have a budget surplus of 2.92 billion euros — a distinct increase from the previously projected 2.5 billion euro figure — when debt repayment is not factored into the picture.
If the numbers hold up, this would mean that the country would meet an important benchmark for eligibility for future bailout money. However, some experts have expressed concern that the country uses a cash basis rather than an accrual basis for its accounting, further citing funds returned by banks to the Greek government and cuts to investment and tax refunds as signs that the economy is not as healthy as it seems to be.
Budget aside, Greece still faces a number of problems that need to be sorted out before the economy will fully turn around. A lack of capital and credit in the country makes it difficult for small businesses, while high unemployment, especially for the country’s youth, remains a perpetual plague.
A bright spot for the Mediterranean nation may come from the tourism industry, which posted positive projections for the summer of 2013. The Greek issue still remains contentious in Germany where elections are slated to be held later this month.
With many Germans concerned that money is leaving their country and flowing south as part of bailout programs, many German politicians have taken harsher stances towards Greece during the election season. However, it remains to be seen whether Europe’s strongest economy will bail on Greece or whether they will consent to be part of another bailout — or two.
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