Policymakers have been debating possible financial support for the heavily-indebted European Union member state for more than a month, but have provided only words of support.
Germany, key to any deal, has resisted appeals to promise aid. British newspaper The Guardian on Saturday quoted sources as saying Monday’s meeting of the currency zone’s 16 finance ministers would agree to make aid of up to 25 billion euros available. But a senior EU source with knowledge of preparations for Monday’s meeting told Reuters no numbers were likely at this stage.
“I think we should be able to agree on principles of a euro area facility for coordinated assistance. The European Commission and the Eurogroup task force would have the mandate to finalize the work,” the source said. “It would be the principles and parameters of a facility or mechanism, which then could be activated if needed and requested. He said no figure had been agreed. “You would have a framework mechanism and you would have blank spaces for the numbers because there has been no request [from Greece] yet,” the source said. Greece has announced steps to reduce its budget deficit this year to 8.7 percent of GDP from 12.7 percent in 2009, triggering street protests and strikes but also reducing market concern over whether the country would be able to service its debt.
That helped Athens sell its bonds with ease on debt markets earlier this month, but policymakers are still searching for ways of making its cost of borrowing -- still far above that of other Europeans -- more sustainable. They are also concerned that the problems in Greece could undermine confidence in the euro and spread to other heavily indebted eurozone countries such as Portugal or Spain.
The EU source said that among the instruments considered to help Greece were both bilateral loans and loan guarantees. “The preparations have been done under the Eurogroup by member states and the Commission. The Commission has done much of the technical work,” the source said.
