Greece moves to calm austerity fears as Germany suggests new bailout
- POSTED: 02 Jun 2014 02:01
Greece sought to calm fears of further austerity, after Germany's finance minister raised the prospect of a third rescue package for the struggling nation.
ATHENS: Greece sought on Sunday to calm fears of further austerity, after Germany's finance minister raised the prospect of a third rescue package for the struggling nation.
German Finance Minister Wolfgang Schaeuble said in an interview published on Sunday that "it's possible that Greece might require further aid, of a limited amount".
"It would be significantly lower than the two previous rescue packages - meaning no more than 10 billion euros (US$13.6 billion)," he told Focus magazine.
His comments fanned fears that the Greek government would be forced to impose further tough reforms including job and wage cuts in exchange for the aid.
Greece's radical leftist party Syriza, which won the European elections on an anti-austerity ticket, said Schaueble's comments pointed to "new measures" that would "exhaust people".
But the Greek finance ministry said the country had no immediate need of extra help.
"The financing needs of our country are covered as everybody knows and Eurogroup acknowledges, until the end of the first semester of 2015," it said in a statement.
"For the 2015-2016 period, our country's financing needs will depend on the results of the bank tests conducted by the European Central Bank (ECB)", it added.
Greece has been rescued from bankruptcy by the International Monetary Fund, the European Commission and the ECB with two bailout packages totalling 240 billion euros (US$331 billion).
In exchange, Athens was forced to undertake drastic reforms including wage, pension and job cuts to bring down its runaway public deficit.
The International Monetary Fund (IMF) released the latest tranche of US$4.6 billion in aid funds to Greece on Friday, after a year-long delay to ensure Athens was meeting targets set by bailout lenders.
The Fund said the Greek government had surpassed targets on closing its budget gap, but warned of a number of challenges still facing the country in fully stabilising its finances and returning to sustainable growth.
According to Schaeuble, Greece's debt, equal to 175 per cent of GDP, will not fall to a sustainable level before 2022.