Eurozone Holds Back a Rescue Package for Greece

Eurozone finance ministers dismissed as incomplete a €3.3bn package of Greek budget cuts necessary to secure a €130bn bailout for Greece.

Greek finance minister was given a new set of demands and an urgent deadline, February 15th. The lenders are demanding from Greece €325m in further cuts to this year’s budget, parliamentary approval of a comprehensive reform package and a pledge from the country’s political leaders to maintain their commitment after April elections. They also demand to improve the country’s tax collection and accelerate the sale of state-owned assets.

If those conditions were met, Eurozone finance ministers would meet again on Wednesday, February 15th to sign the loan agreement, and move ahead with a private sector bond swap, which is expected to cut some €100bn from Greece’s €350bn debt.

Through the loan package and bond swap, Greece’s lenders are trying to lower the country’s debt-to-GDP ratio to 120 per cent by 2020.

However, the €130bn limit and a target to reduce Greece’s debt to 120 per cent were both agreed in October, but as Eurozone and IMF officials have said, Greece’s economic conditions have gotten worse significantly since then, meaning more bailout cash and more debt reduction will be required than originally anticipated.

Source: FT

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