Euro leaders call for decisions on new Greek bailout early July

14:06, June 24, 2011      

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Leaders attend the family photo of the EU Summit in Brussels, capital of Belgium, June 23, 2011. European Union (EU) leaders gathered here Thursday for a two-day summit meeting which is sure to be dominated by the worsening Greek debt crisis. (Xinhua/Thierry Monasse)

Eurozone leaders called on Thursday for decisions to be made in early July on a second bailout package for debt-ridden Greece, piling pressure on the Greek parliament to adopt a new round of austerity measures.

"The euro area heads of state and government call on finance ministers to complete work on outstanding elements to allow the necessary decisions to be taken by early July," the leaders said in a statement after a late-night meeting with their European Union (EU) counterparts.

They agreed that the additional funding for Greece would be financed through both official and private sources, asking private bondholders to voluntarily share the cost of bailing out Athens by rolling over their maturing Greek debts.

Eurozone finance ministers reached a deal earlier this week on the voluntary involvement of private sector in the second bailout for Greece after Germany backed down from its initial insistence that private creditors be forced to accept a later repayment.

Meanwhile, leaders of all 27 EU member states urged the Greek government to continue implementing with resolve the necessary adjustment efforts to put the country on a sustainable path, adding approval of a new austerity and reform package by the Greek Parliament would be a precondition for the second bailout.

"A comprehensive reform package agreed upon with the (European) Commission, in liaison with the European Central Bank and the International Monetary Fund (IMF), and adoption by the Greek Parliament of the key laws on the fiscal strategy and privatization must be finalized as a matter of urgency in the coming days," the 27 leaders said in the same statement.

"Following the request by the Greek government announced by the Greek Prime Minister, this will provide the basis for setting up the main parameters of a new program jointly supported by its euro area partners and the IMF," they added.

The Greek Parliament was due to vote next Tuesday on the new austerity package unveiled by Greek Prime Minister George Papandreou early this month, which led to widespread street protests and vocal resistance from opposition parties.

The Greek government said earlier today that the new package, which involves 28 billion euros (40 billion U.S. dollars) in budget cuts and new taxes, and 50 billion euros (71 billion U.S. dollars) worth of privatization of public assets, had been endorsed by EU and IMF officials.

EU leaders also warned that without the necessary approval by the Greek Parliament of the new austerity package, Greece would be unable to receive the next tranche of loans under the existing bailout program.

The fifth tranche of loans, which amount to 12 billion euros (17 billion U.S. dollars), was originally planned to be handed to Greece this month so that Athens could meet its urgent financing needs in July. But the fund was held off due the country's failure to meet austerity targets.

It was part of the 110-billion-euro (156-billion-dollar) bailout program provided by the EU and the IMF in May last year, but Greece was now believed to need a second package of financial support to stay afloat.

In a separate bid to boost funding for Greece, EU leaders backed a proposal from the European Commission to give Athens easier access to the 27-nation bloc's development aid.

"The European Council supports all efforts to increase Greece's capacity to absorb EU funds in order to stimulate growth and employment. This can be done by refocusing them on improving competitiveness and employment creation," the leaders said.

The EU spends billions of euros every year to help underdeveloped members like Greece to catch up with richer partners in the 27-nation bloc.

The so-called cohesion funds had not been fully utilized by Greece due to the country's inability to come up with matching financing.

European Commission President Jose Manuel Barroso said about 15 billion euros (21 billion U.S. dollars) are still available for Greece until 2013, and the EU is ready to reduce Greek co-financing for the development aid to 15 percent.

"We are ready to consider all proposals for reprogramming and restructuring funding to deliver rapid and better results on the ground," he said.

Source: Xinhua

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