Greek bailout deal faces delays
EU asks for Parliament to approve more budget cuts before delivery of Dh629.76b
Brussels: Greece faces further hurdles and delays before it is to receive its second €130 billion (Dh629.76 billion) bailout in spite of its lawmakers voting through further austerity measures in the face of violent protests.
The European Union Monday called the Greek parliament's approval of a further round of budget cuts a "crucial step forward" but added that it would still take some time before the second bailout is delivered.
Germany's finance ministry said the country won't give its final approval for the new aid payments until early March — after there is clarity on how well a debt relief deal with private bond holders would work and its parliament has voted on the new measures.
Pushing the new bailout back for several weeks underlines how much distrust has built up against Greece over the past two years, when many promised cuts and reforms were passed in Parliament but never actually implemented.
But it also means that Greece, its citizens and the rest of the world economy won't know for several weeks whether the country can avoid a potentially disastrous default.
Greece's political leaders scrambled over the weekend to get new far-reaching austerity measures through Parliament ahead of a meeting of the finance ministers from the 17 euro countries tomorrow.
The €130 billion in new rescue loans are needed to prevent the country from a potentially catastrophic default next month.
However, the Greek vote hasn't brought an end to the uncertainty. Apart from some technical decisions, several key issues remain:
- It is unclear whether the new spending cuts, the debt relief deal and the new bailout will be enough to bring Greece's debt load down to 120 per cent of economic output by 2020.
- The other 16 euro countries are still waiting for the leaders of Greece's two main political parties to commit in writing to implementing the new austerity measures even after elections expected for April.
- National parliaments in Germany, Finland and the Netherlands will have to vote on the second bailout package. Since those countries are traditionally most critical of bailouts, the votes are unlikely to happen before there is clarity on whether the bailout deal will actually make Greece's debt sustainable again.
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