Another delay to the next tranche of aid for Greece forces the country to go cap in hand to the markets for money.
11:06am Tuesday 13 November 2012
Debt-laden Greece has been forced to tap the financial markets further to avoid bankruptcy after Eurozone finance ministers delayed a crucial aid payment.
The country, which faced a bond repayment on Friday it could not afford, was banking on Eurozone finance ministers releasing a long-delayed 31 billions euros (£23.5bn) to meet the bill.
But at a meeting on Monday night the ministers said they would have to gather again on November 20 to make a decision because there was still work to do on finalising the details of the bailout.
Eurogroup head Jean-Claude Juncker said Greece had made progress on its commitments to reduce debt and the public deficit - and insisted there would be no problem for Athens in rolling over the debt.
He said: "I will do all I can to make sure that a decision is taken on November 20. I won't tell you how but there won't be a problem on November 16 (Friday)."
European Economic Affairs Commissioner Olli Rehn explained that Greek banks would be able to take part in a government sale of treasury bills, providing the money Athens needs to cover the debt repayment.
That was completed on Tuesday morning when it raised 2.762.5 billion euros in one-month Treasury bills at an interest rate of 3.95% and a further 1.3 billion euros in three-month bills at 4.2%.
If Athens had been disappointed by the further delay to its bailout funds, a proposal to extend its debt reduction deadline by two years to 2016 was accepted despite strong reservations about the sustainability of Greek debt raised by the head of the International Monetary Fund (IMF), Christine Lagarde.
The IMF, which makes up the so-called Trioka of international lenders to Greece along with the European Central Bank (ECB) and European Commission, is worried about the extra cost the extension would impose.
A draft report by the Troika on Greek austerity efforts, seen on Monday, put the additional cost at nearly 33 billion euros (£26.3bn), with the bill rising as the economic outlook darkens.
Greece's debt mountain - now nearly 190% of GDP - is supposed to come down to 120% by 2020 and Madame Lagarde insisted that target be maintained though Mr Juncker believes it should also be extended by two years.
The 17 eurozone finance ministers have joined their 10 non-euro colleagues today for another meeting, expected to focus on how to boost the slumping economy and the bloc's hotly contested 2014-20 budget.
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