GREECE’S UNRELENTING DEBT drama tops the agenda today when Eurozone finance ministers in Brussels will discuss whether Athens has met conditions set by its international creditors to provide bailout funds so it can stay afloat.
The talks come hours after the Greek parliament, amid noisy protests, agreed a tough cost-cutting 2013 budget, the latest hurdle cleared by Athens to guarantee the release of the foreign aid needed to stave off insolvency.
However no decision is expected in Brussels today on delivering a much-awaited fresh aid tranche of €31.5 billion held back since June.
Before moving to unblock the funds, part of Greece’s second international bailout, the 17-nation single currency area awaits a report from the so-called “troika” of creditors — the European Union, European Central Bank and the International Monetary Fund.
This will focus on whether Greece is fulfilling the bailout conditions and dwell on how to cope with the country’s ballooning debt.
With debt heading far above a target of 120 percent of GDP by 2020, some eurozone officials believe Athens needs more time to meet its bailout targets.
But this costs extra and is a difficult option when the European economy is slumping into recession and governments want to cut spending.
“There will be no default, not accidental, not premeditated,” an EU official said of Greece on Friday.
The pressure on struggling Spain, meanwhile, has eased. After looking at one point earlier this year to be in need of a massive bailout, Madrid has weathered the storm for now, though the economic outlook is far from reassuring.
“We understand that (Spain) does not want to ask for help,” the official said.
The European Commission this week slashed its economic forecasts for the EU as the debt crisis exacts a heavy toll on growth and government finances but it insisted austerity remains the only way forward.
Greece, deep in a recession which has shrunk the economy by a fifth, appears however to have reached the limits, with Greek Prime Minister Antonis Samaras warning that the country cannot take any more austerity and must have growth.
Samaras says Athens could run out of money by November 16 unless its creditors clear the around 31 billion euros in aid funding.
Athens announced Friday that it would sell short-term bills on November 16, seeking to cover the maturing debt — another incentive for eurozone finance ministers to deliver on their end of the bailout bargain.
“The Greek authorities have put in an enormous effort amid enormous difficulties, economic, political and social,” the EU official said, adding: “The most important thing now is debt sustainability.”
Greece’s total debt next year is predicted to be almost 190 percent of economic output, way beyond what it could ever hope to keep up with or pay back, making a reduction imperative if it is ever to stand on its own two feet again.
“We are not far from an accord,” one EU diplomat said, given what Greece has done, and there have been discussions on giving Athens a two-year extension to 2016 to meet its targets for reducing its mountain of debt and public deficit.
While the focus will be on Greece, ministers will want to review the situation in Spain where Madrid is preparing a costly restructuring of its banking sector, stricken by the bursting of a massive property bubble in 2008.
In June, when Spain seemed very likely to follow Greece, Ireland and Portugal in needing a bailout, the EU agreed to provide Madrid with 100 billion euros to stabilise its ailing banks and ease the pressure.
The EU diplomat said ministers will review a report from Madrid on the programme, which “is on track,” so that a first aid payment can be made.