June 20, 2011
They bargained through the night, but in the end they failed to reach an agreement to release the next desperately-needed tranche of money for Greece. Expect a new round of panic in the bond markets.
After seven gruelling hours in Luxembourg, which included a video conference with colleagues from G7 countries, the finance ministers of the 17 countries of the euro zone decided to delay until July the disbursement of €12 billion ($17 billion) in loans from the European Union and the IMF.
By then, they said, two issues would have become clearer. Firstly, the finance ministers say they want to know how far Greece’s private creditors are willing to help “voluntarily” by rolling over Greek debt when current bonds mature. This has become vital for German domestic opinion to sweeten the bitterness of having to support a second bail-out for Greece.
Secondly, the euro zone wants to know whether the reshuffled government of George Papandreou, the embattled Greek prime minister, will secure a vote of confidence in the Greek parliament, which is expected to come on Tuesday. Greek MPs are also due to approve, by the end of June, the next round of austerity measures and structural reforms—including a wholesale privatisation of state companies and lands.
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