ECONOMY

Race on to avoid Greek default

The European Union is working on a second bailout package for Greece in a race to release vital loans next month and avert the risk of the eurozone country defaulting, EU officials said on Monday.

Senior officials held unannounced emergency talks with the Greek government over the weekend, an EU source said, according to Reuters.

EU officials said a new 65-billion-euro package could involve a mixture of collateralized loans from the EU and the International Monetary Fund, as well as additional revenue measures, with unprecedented intrusive external supervision of Greece?s privatization program.

?It would require collateral for new loans and EU technical assistance – EU involvement in the privatization process,? one senior EU official told the news agency.

Extra funding for Greece faces fierce political resistance from fiscal conservatives and nationalists in key north European creditor countries – Germany, the Netherlands and Finland – complicating the EU governments? task.

Dutch Finance Minister Jan Kees de Jager on Saturday warned Greece that it risks failing to receive the next batch of bailout loans promised by international lenders.

In the Cypriot city of Limassol, the Dutch minister urged Greece to fully comply with the measures and conditions the IMF has laid down, referring to further austerity measures and structural reforms.

?If it does not, Holland, Germany and Finland will follow the IMF should it decide not to give more money to Greece,? he said.

?This may sound like a tough line but it is a right one,? de Jager added.

More on the Greek debt crisis came out from the The Financial Times, which reported on Monday that European Union leaders are negotiating a deal that would lead to unprecedented outside intervention in the Greek economy, including international involvement in tax collection and the privatization of state assets, in exchange for new bailout loans for Athens.

?People involved in the talks said the package would also include incentives for private holders of Greek debt voluntarily to extend Athens?s repayment schedule, as well as another round of austerity measures,? claimed the newspaper without naming its sources.

There is doubt that Greece will be able to return to the financial markets to raise money in March as foreseen in the loan memorandum it signed last year, which means that the IMF would be forbidden from distributing any additional funds.

Without the IMF funds, eurozone governments would either be forced to fill the gap or Athens could default.