Euro crisis may affect Greek loans

The Greek government admitted Thursday that the growing economic crisis in the eurozone, which prompted European Commission President Jose Manuel Barroso to plead for the strengthening of the European Financial Stability Facility (EFSF), could affect the disbursement of the second package of financial assistance for Athens agreed in Brussels last month.

Speaking to journalists, government spokesman Ilias Mosialos said that the current uncertainty in the eurozone might mean that Greece will not receive its 8-billion-euro loan installment in September from the 109-billion-euro package sealed on July 21 but from the 110-billion-euro EU-IMF deal agreed last year.

This would mean that Greece would not benefit from the lower interest rate, 3.5 percent rather than 4.5 percent, and extended loan maturities of 15 to 30 years rather than 7.5.

?The difficulty that could arise if events lead to wider decisions at an EU level is that we will receive the sixth installment from the old loan package in September with the old terms and not the ones from the new loan package, which are clearly much better for us,? Mosialos said.

Also Thursday, Prime Minister George Papandreou responded to a call from Barroso to all eurozone governments to speed up the implementation of the measures agreed in Brussels last month. Papandreou pledged that his government, which passed a raft of legislation through Parliament yesterday, would keep up the pace of reforms demanded by its lenders. The bills approved by MPs ranged from tourism zoning to the granting of an exclusive license to state-run gaming firm OPAP to operate 35,000 videolotto machines.

Sources said that in his written response to Barroso, Papandreou also called for Europe to take bold decisions so it could ?stop following markets and get ahead of the curve.?

In a new letter to EU leaders Thursday, Barroso urged them to take steps to strengthen the EFSF and its imminent successor, the European Stability Mechanism (ESM) ?in order to ensure that they are equipped with the means for dealing with contagious risk.? The Commission chief also partly blamed ?the undisciplined communication and the complexity and incompleteness of the 21 July package? for the jitteriness of the international markets.

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