Eurogroup head: Greece to wait on debt relief, but bank rescue decision sooner

ATHENS, Greece – Eurozone countries will not consider possible debt relief for Greece until April 2014, the euro currency bloc’s head said Friday on a visit to Athens.

Still, Jeroen Dijsselbloem said a landmark decision was likely next month on how Europe’s new bank rescue mechanism will work.

Dijsselbloem, the Dutch finance minister who chairs meetings of the 17-nation eurozone, met with Greek Prime Minister Antonis Samaras and Finance Minister Yannis Stournaras to discuss the debt-ridden nation’s efforts to reform its economy.

“I am confident the Greek program is on a sound footing … there are the first signals of a turn in the economy,” Dijsselbloem said. “There is optimism that growth will pick up in the eurozone as well as in Greece next year.”

Hammered by a prolonged financial crisis, Greece has been relying on funds from international rescue loans since May 2010. But austerity measures it agreed to in return for the loans have pushed Greece deeper into recession. Poverty has surged and unemployment is reaching 27 per cent.

Greece restructured its privately-held bonds last year. But the country is still struggling to stabilize its national debt — which is set to rise to 175 per cent of its annual output this year — and has been promised additional relief from the eurozone if Athens delivers its promise to balance its budget this year.

What form that relief will take remains unclear.

“We have said that in April next year we will take stock of the course of (Greece’s) public debt … I see no reason to start these discussions early,” Dijsselbloem said.

However, he said discussions were to be completed by June 20 on how the eurozone’s new rescue fund would pump money into troubled banks without adding to the national debt of host countries.

“The mechanism will be available … hopefully in mid-2014,” he said, adding it was still unclear whether Greece could benefit retroactively regarding its massive current bank recapitalization program.

“The retroactive use of direct recap is a sensitive subject on which discussions have yet to be finalized,” he said.

The 47-year-old Dutch minister said he was not worried about a French-German proposal to turn his position into a more permanent post.

“I think (the current system) functions well. Personally, I think we have to be a little careful not to have too many institutions in Brussels,” he said.

The IMF said Friday, meanwhile, that it will disburse a $2.26 billion tranche of a rescue loan after it completed a review of the country’s performance under the economic program tied to the bailout agreement.

The payment will bring the total amount of IMF payouts to $8.55 billion since the March 2012 agreement. The contribution is part of the much bigger bailout package with European nations. So far Greece has received more than $250 billion.


AP writers Elena Becatoros in Athens and Marjorie Olster in Washington contributed.