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Stournaras Sees New Bailout, Not Austerity

stournaras_390_3007Greek Finance Minister Yannis Stournaras, who keeps revising the potential need for more aid for Greece, said if a third bailout is required that it would be for only 10 billion euros ($13 billion) and that there would not be any more austerity measures attached as was to the first two rescue packages from international lenders of some $325 billion.
“If there is need for further support to Greece, it will be in the order of about 10 billion euros, or much smaller than the previous programs,» Stournaras told the Greek newspaper Proto Thema. Any future bailout would go ahead “without new terms,” he said, as Greece’s austerity commitments were already set until 2016.
There was “no question” of a fresh cancellation of debt, Stournaras added although Greece had floated the idea of being able to write down its debt by imposing losses on its lenders, the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) as it did to private investors two years ago, reducing what it owed then by 107 billion euros ($142 billion).
Stournaras insisted in comments in the German newspaper Handelsblatt that Greece will not need a second haircut. He added, however, that there were “several options” for relieving Greece’s debt burden, either by lowering interest rates on existing loans or extending the repayment period. He also said there’s a possibility Greece could return to the markets late in 2014 if investors who weren’t afraid the government would renege on paying them too were interested.
German Finance Minister Wolfgang Schaeuble said last week that Greece would need another bailout but also that it would be much smaller tham the first two. The problem is that pay cuts, tax hikes and slashed pensions have reduced expected revenues far more than estimated and created a record unemployment rate, putting 1.4 million people out of work and closing 110,000 businesses the last three years.
The IMF earlier estimated Greece would within the next two years need another 11 billion euros ($14 billion) but the size of the hole keeps changing as the government tries to get a handle on tax revenues and impose more reforms while speeding the pace of privatization.
Without more aid, Greece would likely need more austerity which Prime Minister Antonis Samaras has vowed to avoid. He opposed austerity before taking power and then embraced it as the country’s savior.

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