ECONOMY

Merkel gives Greece more time

Germany?s Angela Merkel wants Greece to be given more than three years to sort out its public finances, the chancellor said in a plea for the repayment terms of its bailout to be extended.

?Greece has to cope with the consequences of its grave errors in financial policies. You can?t do that in three years,? Merkel is quoted as saying in the preliminary version of a report to be published in German newspaper Bild Friday.

A 110 billion euro European Union-International Monetary Fund bailout program for Greece set up in May last year is scheduled to run out in 2013.

Merkel also rejected a restructuring of Greek debt, telling the newspaper that ?no instruments? for that were available.

The German Chancellor also said further aid for euro-zone countries needs to be linked to strict conditions and that Germany will veto future bailouts if prerequisites for aid aren?t given.

Any future bailout also needs to be decided upon by all euro-zone countries, Merkel added.

Euro-zone government leaders meet in Brussels today to debate stricter rules on budget discipline, a strengthening of a temporary fund to bailout troubled euro-zone members, and details for a future permanent rescue fund.

Meanwhile, Greek Finance Minister Giorgos Papaconstantinou has asked the EU to urgently reform the way ratings agencies are allowed to operate after what he called ?unbalanced and unjustified? downgrades of Greece and other struggling European economies.

Papaconstantinou wrote in a letter on Thursday that a ratings cut of Greek debt by Moody?s this week risked creating damaging ?self-fulfilling prophesies.?

On Monday, Moody?s downgraded Greece?s debt grade further below junk status, slashing its rating by three notches to B1 from Ba1. The agency also slashed Spain?s rating on Thursday, by one notch to Aa2.

On Wednesday, ten members of Parliament from Greece?s ruling Socialist party signed a petition urging the government to take legal action against Moody?s, claiming the agency had deliberately intended to weaken the country?s negotiating position ahead of this week?s European Union meeting.