ECB predicts follow-up Greek funding will be needed after 2014

ECB policymaker Joerg Asmussen has said Greece will probably need a follow- up programme for the years following 2014 after the eurozone, this week agrees on the country’s funding for the next couple of years.

Mr Asmussen said: “We should, next week, settle the financing for the years 2013 and 2014, but you have to be honest and say we do not really expect the country to have access to markets in 2015 and 2016.

“That means a follow-up programme would be necessary.”

Elsewhere, the head of the IMF, Christine Lagarde said that an agreement among Greece’s creditors on how to reduce its large debt pile should be “rooted in reality and not in wishful thinking”.

To Ms Lagarde, that means countries in the eurozone should send a strong signal they remain committed to Greece by agreeing to reduce the debt Athens owes them.

“I am always trying to be constructive but I am driven by two objectives: to build and approve a programme for Greece that is solid, that is convincing today, that will be sustainable tomorrow, that is rooted in reality and not in wishful thinking,” she said.

“The second objective is to maintain the integrity, credibility, and quality of advice that we are giving, not for the fund itself, which obviously is a concern of mine, but to lend that to the Europeans because that is what they are interested in,” Ms Lagarde added.

Jean-Claude Juncker, who chairs the Eurogroup of finance ministers, said last week that the target of reducing Greece’s debt to 120% of GDP by 2020 should be moved by two years to 2022.

Ms Lagarde disagrees with this, insisting the target of 2020 should remain.

But, the stand-off threatens to further delay the next €31.5bn tranche of Greece’s bailout, pushing the country close to bankruptcy. Greece’s successive bailouts have already suffered setbacks from elections and resistance to reforms.

* Reuters

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