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Low Expectations for Greece in Brussels

The resignation of Portuguese government late Wednesday weighs on the European Union Summit that starts today, as the country seems very close to resorting to the European Financial Stability Facility. At the same time, Ireland still refuses to increase the tax rate of enterprises in order to get a reduction of interest rate by the rescue fund, and Germany faces internal opposition regarding the initial agreement for the enhancing of EFSF.
Additionally, France turns the heat on European Union to adopt its aggressive attitude against Libya, but Germany is maintains a negative stance.
The so-called “comprehensive solution” and particularly the decisions for a short-term encounter with the debt crisis through EFSF are at risk, with a further postponement until June. Common ground is limited to the “competitiveness pact” and European Commission’s amendments to the Stability Pact.
The above consist no good news for Greece, which had been hoping to solve in this very Summit its short-term issue of formalizing the reduction of loan interest rate and the lengthening of repayment period, along with ensuring the possibility of resorting to EFSF in 2012 to cover a part of its sinking fund repayment obligations.
While rate reduction and lengthening are considered certain to be formalized, the decision whether Greece could resort to EFSF next year is expected to be postponed until June, as commented on Monday after the Eurogroup meeting.

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