June 15, 2011
Euro-zone officials failed on Tuesday to narrow sharp divisions over how to encourage Greece's private creditors to help finance the nation's mounting public debt, a move that threatens to delay a decision on a new multiyear aid package for the country.
The currency bloc's finance ministers, who met for hours in Brussels, said they would ensure Greece wouldn't face a cash crunch next month. The country is scheduled to get the next €12 billion ($17.2 billion) of a €110 billion loan package from the euro-zone governments and the International Monetary Fund by the end of June, but doubts from the IMF about whether Greece has enough financing over the next year have endangered that payment.
"I think financing is within reach for the coming weeks," Belgian Finance Minister Didier Reynders said after the meeting. "Finding a solution for the medium term concerning Greece will take a bit more time."
IMF rules require countries to have assured financing over the next year or so before the fund can pay out the next slice of a loan package. When Greece negotiated its rescue loan last year, European Union and IMF officials planned for the country to resume long-term borrowing from private investors in 2012. With yields on two-year Greek debt hovering above 20%, that won't be possible, leaving Greece with a large financing gap starting next year.
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