No room for loose ends in aid as EU enters new territory

Paris: French Finance Minister Christine Lagarde said the unprecedented aid package for Greece from euro-area countries leaves "no room" for disagreements that would substantially alter the loan plan if it is activated.

"It leaves no room for queries, questions or moodiness," Lagarde told journalists yesterday in Paris. "I'm very confident that all the technical and practical aspects of the so-called Greek package have been thoroughly discussed and agreed."

Lagarde and her fellow finance ministers from the 16-nation euro region hammered out a 30-billion-euro (Dh149.8 billion) aid package for Greece on April 11. The plan is that the group will provide Greece with three-year loans at the below-market rate of 5 per cent if it can't raise money in the markets, the first such effort since the euro was created in 1999.

The French government, which would be the second-largest contributor after Germany to such a loan, would probably be able to obtain parliamentary approval to raise the funds within one week, Lagarde said.

Lagarde told journalists that the governance of the euro area has taken a step forward with the group's response to Greece's crisis. "We are effectively forging something new," Lagarde said. "Let's hope we never need it again. But should we, certainly we have demonstrated that we can come together, close ranks and address the situation."

She also repeated earlier comments directed at Germany about the need to address structural trade deficits and surpluses. "It's a two-way street," Lagarde said. "It means those who have competitiveness gaps must as a matter of priority try to narrow those gaps. Those who have had massive improvements in competitiveness should also do a little something," she said.