No Greek bailout request so far

Greece passes up opportunity to ask for help at eurozone finance talks in Madrid

Published April 16, 2010 12:17PM (EDT)

Greece did not request financial help at a Friday meeting of all 16 countries that use the euro in Madrid on Friday, officials said.

Greece's mounting debt and high cost of borrowings have forced it to ask for standby loans of at least euro30 billion from other euro nations and the International Monetary Fund.

The government has called in EU and IMF officials for Athens talks on Monday but insists that this is not a signal that it will formally request a bailout within days.

Greece had an opportunity to trigger the financial lifeline at the Madrid talks between eurozone finance ministers on Friday morning -- but did not use it.

"I can confirm that the Greek authorities didn't put forward a request and any indication that the Greek authorities would do so," said Jean-Claude Juncker, the head of the group of eurozone finance ministers.

Greece could still ask for help at the two-day meeting: eurozone countries will be joined by finance ministers from all 27 EU countries for talks that continue later Friday and Saturday.

German Finance Minister Wolfgang Schaueble -- who did not attend the meeting due to illness -- told Suedwestrundfunk radio that he believed Greece may not need the financial lifeline agreed by eurozone countries last Sunday.

"We still believe that the Greeks are on the right road, and that in the end they perhaps won't need to take up the aid at all," he said.

Greece on Thursday asked the European Commission, the European Central Bank and the International Monetary Fund to step up work on the aid package.

Prime Minister George Papandreou told the Greek parliament Friday that "we are making all preparations as required," describing the financial pledge as "a safe haven."

Greece had hoped that details of last-resort loans would reassure markets who have charged high interest rates for Greece. Initially, that worked, with rates falling after the Sunday announcement of loans.

But uncertainty over how long it would take the money to be paid out saw markets hike the spread, or difference in yields, between Greek and benchmark Germany 10-year government bonds to around 4.15 percentage points Friday.

Investors are demanding high rates for Greek bonds because they believe Greece could be unable to repay debt despite recent efforts to cut a massive budget gap. They are also worried that a eurozone bailout could take weeks or months because Germany must gain approval from its parliament to lend the largest share of the package, at euro8.4 billion.

The IMF has not yet said how much it would pledge -- and whether it could offer aid faster than European treasuries. EU officials said they expected the IMF to provide some euro15 billion.

Greece needs to borrow some euro11 billion next month and has already raised nearly half of the euro54 billion it wants to borrow this year. The country is also under pressure to toughen an austerity program to show that it is committed to reducing a deficit from around 13 percent of national income last year to some 3 percent in 2012.

Greece's flagrant flouting of EU debt and deficit limits has triggered drop in the euro's value against the dollar and exposed the flaws in the loose way eurozone governments are supposed to coordinate their economies.

Most eurozone nations are now running deficits above the EU's maximum 3 percent and are promising to reduce those over the next few years.

EU officials are calling for more, saying the European Commission should check budget spending before parliaments do and should monitor how euro member economies are faring. They say these moves could prevent a country like Greece overspending and failing to reform its economy.

They are also warning that richer euro nations, like Germany and the Netherlands, need rely less on exports and consume more, saying they could help rebalance wide differences in the euro area by stoking domestic demand and investment.

Belgium and Ireland's ministers missed the eurozone talks as volcanic ash held up flights in northern Europe. Swedish and Danish ministers were also due to skip the broader meeting of all 27 EU members starting later Friday.

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Associated Press writers Greg Keller and Ciaran Giles in Madrid, Geir Moulson in Berlin and Nicholas Paphitis and Elena Becatoros in Athens contributed to this story.


By Associated Press

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