Germany dismisses talk of third Greek bailout

Germany and the European Commission slapped down talk of a third financial rescue for Greece as premature, after Spain once again suggested yesterday that a new aid package for Athens was almost inevitable.

Athens, which says it does not need a new aid programme, averted a crisis yesterday by raising over €1bn in short-term debt as planned, but its long-term funding outlook appears increasingly uncertain.

The country has secured a four-month extension to its bailout programme until the end of June but remains shut out of debt markets and its new left-wing government has angered eurozone partners with its sharp anti-bailout rhetoric.

For the second time this week, Spanish economy minister Luis de Guindos said that Athens was unlikely to be able to return to capital markets by June, and that a package of between €30bn and €50bn would be needed.

“If Greece does not recover market access by June… we will have to establish some other type of agreement with Greece, call it a pact, a deal, a programme,” Mr de Guindos said.

“We have given ourselves these four months to, one, see what the real situation is, to see how Greece has met conditions, and to try and establish what happens next... which is fundamentally a third rescue.”

He was swiftly rebuffed by German Chancellor Angela Merkel, who said she was focusing on the current bailout.

“I think we now have all our hands full to make this succeed and that’s what I’m concentrating on,” she said at a news conference with European Commission president Jean-Claude Juncker in Brussels.

A German finance ministry spokesman also said no discussion of a third Greek aid programme was on the agenda for Monday’s eurogroup meeting of finance ministers, while Mr Juncker agreed with Ms Merkel on keeping the focus on implementing the extension to Greece’s bailout agreed last month.

“It is premature to talk about a third programme,” he said.

“That is speculation that is best avoided.”

The fresh talk of a bailout comes amid growing worries about a more pressing funding crunch for Athens in the coming weeks.

At least part of the state’s cash needs for the month will be met by repo transactions in which pension funds and other state entities sitting on cash lend the money to the country’s debt agency through a short-term repurchase agreement for up to 15 days, debt agency officials have told Reuters.

Greece is hoping EU and IMF lenders will relent and unfreeze some aid to ensure it does not default on its payments.

Athens is due to present a six-point reform plan to eurozone finance ministers on Monday to press its case.

IMF chief Christine Lagarde told MSNBC yesterday that the success of Greece’s reform plan would depend on the framework put in place and how the overhaul is implemented.

“They’ve made progress over the years,” Ms Lagarde said.

“But now clearly number one, they should not lose the benefit of that progress and, two, they really have to reform in-depth the economy so that it works, so that it’s attractive again and so that people want to invest in Greece, so that people want to lend to Greece.”


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