What Will the EU Do to Save Greece?
European Union leaders plan to have a decision about additional aid for Greece by the end of June, having already ruled out the possibility of a total restructuring of the nation’s debt. They will be reviewing the progress of the Greek economy since last year’s 110 billion euro bailout.
Last year’s aid package set terms for Greece to return to financial markets and sell about 30 billion euros of bonds in 2012. In order to do so, the EU is now saying that Greece will need more bailout money. The International Monetary Fund is threatening to withhold their payments until the EU explains how Greece will be funded.
Currently EU and European Central Bank officials haven’t decided on a course of action. Some are calling for new loans and debt reprofiling, others simply suggesting they extend the amount of time Greece has to begin selling bonds. Senior aides to European finance ministers will be meeting in Vienna Wednesday to discuss these issues. The EU and IMF will have to give Greece another 30 billion euros in loans to tide them over until next year.
According to Laurence D. Fink, chief executive officer of BlackRock Inc. (NYSE:BLK) and the world’s biggest money manager, Greece isn’t wholly to blame for Europe’s financial problems, and a restructuring of Greece should be accompanied by a restructuring of Ireland and Portugal as well if the EU is to bounce back.
Greece is playing their own part by increasing budget cuts in order to shrink the deficit, as well as selling state assets, mostly real estate holdings, to pay down the debt, which is set to reach nearly 160% of GDP this year, the highest in the history of the euro.