January 10, 2012
Germany and France on Monday pressed Greece and its bondholders to agree on a reduction of Athens's debt burden, warning that Greece's bailout loans from the euro zone and the International Monetary Fund are on hold until a deal is reached with private investors.
German Chancellor Angela Merkel and French President Nicolas Sarkozy met in Berlin on Monday to discuss the euro zone's plans to tackle the debt crisis on the bloc's periphery, and to flesh out their proposals for closer coordination of economic and budget policies among the euro's 17 member countries. But their talks were overshadowed by concerns in financial markets that Greece's bailout program is in danger of unraveling, driving the euro to a 16-month low and hitting global stocks on Monday.
Greece's deteriorating economy is threatening the viability of a €130 billion ($165.2 billion) bailout for the country that European leaders agreed to in October. The bailout package, which followed an earlier aid deal for Athens that was agreed on in 2010, relies on Greece negotiating a 50% reduction in much of its outstanding bond debt. It also requires Greece's government to make fresh efforts to cut its budget deficit.
"The second Greece program has to be implemented soon, otherwise it won't be possible to disburse the next tranche" of aid loans, Ms. Merkel told a joint news conference with Mr. Sarkozy after their meeting.
A spokesman for the Greek government declined to comment on Monday.
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