Eurogroup puts off Greece decision until early July

Finance ministers from eurozone countries agreed during a meeting early on Monday that they would decide in early July the main outlines of a second bailout for Greece, including private-sector contributions.

“We have agreed today that the contribution (of the private sector) must be voluntary, but … Greece also has to deliver,? said the head of the Eurogroup Jean-Claude Juncker in the early hours of Monday.

“If you aim for a voluntary private contribution you can’t fix what size it must be beforehand. That also has to be discussed with private creditors.

Juncker emphasized that Greece had to keep its side of the agreement by passing further austerity measures.

“We very much depend on Greece’s parliament passing all bills and we will discuss more about the role of private creditors at the beginning of July, but the role will be voluntary and we will have to check whether Greece will by then have fulfilled its obligations.

“As the vote by the Greek parliament has been fixed for the end of June, we cannot make an engagement without knowing if the Greek parliament after having voted on the no-confidence vote endorses the commitments made by Greece (to the EU and IMF).”

Earlier, Greece?s new finance minister, Evangelos Venizelos, insisted that Greece would stick to its plan for putting public finances in order.

“It is a great opportunity for me to repeat the strong commitment of the Greek government and the strong will of the Greek people for the implementation of the program,» Venizelos said as he headed into the conference centre for the meetings Sunday.

“We can achieve our target, thanks to the efforts of our people, and thanks to the cooperation and the assistance of our partners,» he added.

The eurozone finance ministers issued the following statement on Greece after their talks:

“The Greek authorities are embarking on a significant and necessary adjustment effort.

Ministers recognised the considerable progress achieved by the Greek authorities over the last year, particularly in the area of fiscal consolidation. Ministers are also conscious of the serious challenges that Greek citizens are facing in these difficult times.

Ministers took note of the debt sustainability assessment prepared by the Commission and the IMF. The assessment showed that debt sustainability hinges critically on Greece sticking to the agreed fiscal consolidation path, the plans of collecting 50 billion euro in privatisation proceeds until 2015, and the structural reform agenda which will promote medium-term growth.

Ministers look forward to the Commission’s Compliance Report, that requires the finalisation of the updated Memorandum of understanding, which is expected in the coming days, reflecting the outcome of the ongoing negotiations between the Greek government and the European Commission, in liason with the ECB, and the IMF.

This, together with the passing of key laws on the fiscal strategy and privatisation by the Greek parliament, will pave the way for the next disbursement by mid-July.

However, given the difficult financing circumstances, Greece is unlikely to regain private market access by early 2012.

Ministers agreed that the required additional funding will be financed through both official and private sources and welcome the pursuit of voluntary private sector involvement in the form of informal and voluntary roll-overs of existing Greek debt at maturity for a substantial reduction of the required year by year funding within the programme, while avoiding a selective default for Greece.

On these conditions, ministers decided to define by early July the main parameters of a clear new financing strategy.

Ministers call on all political parties in Greece to support the programme’s main objectives and key policy measures to ensure a rigorous and expeditious implementation. Given the length, magnitude and nature of required reforms in Greece, national unity is a prerequisite for success.”

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