ECONOMY

Finnish headache for eurozone

The issue of Finland?s demand from Greece for collateral in order to participate in the new bailout package for Athens will be the focus of Friday?s video conference of the eurozone?s finance ministers, as the International Monetary Fund plans its next loan tranche to Greece for end-September.

The eurozone meeting comes as Finland?s insistence on obtaining guarantees has led markets to increasingly dispute the bloc?s ability to resolve its problems, with Bloomberg reporting yesterday that any collaterals given to Finland or any other country would likely lead Greece to default. That had seemingly been avoided after the July 21 agreement for the second bailout, but it has resurfaced now.

German newspaper Handelsblatt wrote on Thursday that Brussels will reject the deal between Athens and Helsinki on collateral, and that German Finance Minister Wolfgang Schaeuble made it clear to government deputies that the option of Finland securing guarantees was not on the negotiating table.

IMF spokesman David Hawley stated on Thursday that ?the Fund?s executive board could be in position to consider approval of the next disbursement toward the end of September.? He added that once the IMF?s mission to Athens completes its review around September 5 and ?assuming agreements are in place,? the sixth tranche of the first bailout package would be disbursed at the end of next month. He also said that Eurobonds could contribute to resolving the debt crisis in the eurozone.

In Athens, Finance Minister Evangelos Venizelos stated that ?the big hope and the big fight is for the recession to be overcome quickly, so that 2012 can signal the start of a new course for the Greek economy.?

He went on to reject any discussion on value-added tax rates for food catering, which will climb to 23 percent from next Thursday, saying that ?it makes no sense, unless we agree first on how the tax-collection mechanism will operate.?

However, 28 food catering chains yesterday issued a warning to Venizelos that 120,000 employees in the sector could become unemployed soon due to the VAT hike.