Greece may be given more time to get its finances in order and Spain seems to inching closer to making a formal request for a bailout – those were the headlines from the eurozone finance ministers’ meeting in Cyprus.
Athens is way behind on its debt-cutting programme but the ECOFIN consensus was it makes no sense to tip Greece into default now and plunge the euro area back into chaos.
The ministers heard that a report on Athens progress from the ‘troika’ inspectors of the EU, European Central Bank and the International Monetary Fund is not likely to be ready before early October, pushing a decision on Greece’s bailout loans into the second half of October.
The International Monetary Fund’s Christine Lagarde said Greece may get more time to make the cuts demanded of it in return for bailouts: “The review process is underway and just began a week ago, so I think it’s really premature to already pass judgement on the timing issue. Greece has already produced a huge effort, but will have to continue to do so. There are various ways to adjust – time is one that needs to be considered as an option.”
Spain meanwhile, which is under pressure to spell out whether it needs more European financial support, said it will present a bold new economic reform plan – with clear deadlines – by the end of the month.
“We will adopt a new set of reforms to boost growth… It will be in line with the recommendations of the European Commission,” Economy Minister Luis de Guindos told journalists after meeting his counterparts in Cyprus.
However in Madrid, Deputy Prime Minister Soraya Saenz de Santamaria said the cabinet would simply issue a new calendar on September 28 for enacting reforms announced in July.
Her comment appeared to undercut De Guindos’ pledge in another example of communications problems that have dogged Spain’s government.
The timing suggests a request for aid may not be far away, although de Guindos insisted the package was unrelated to any possible bailout terms. Several euro zone officials have speculated Spain could apply in time for the next meeting of eurozone finance ministers on October 8.