Eurogroup dashes Greek hopes for funding gap fix

Top-ranking European officials meeting in Luxembourg suggested on Monday that no decision regarding Greece’s bailout program would be made before the end of the year, while also dashing Greek hopes of rolling over bonds due to mature next spring in order to cover a funding gap next year.

On arriving at a summit of eurozone finance ministers in Luxembourg, ECB executive board member Joerg Asmussen ruled out the possibility of rolling over bonds due to mature next spring to cover a funding gap which Greece estimates at around 4.4 billion euros. Asmussen put the funding gap closer to 6 billion euros and said that other methods must be found to plug it.

“We must find a way to close the financing gap and there is absolutely no way it can be done in a way of roll-over bond or whatsoever which results in monetary financing; this is not possible for the ECB and not for the whole euro system,” he said.

Asmussen said officials meeting in Luxembourg were to have “a first exchange of views” on how to close the financing gap of the existing program.

European Monetary and Economic Affairs Commissioner Olli Rehn struck a similar tone. “We will reflect in the coming weeks to see and decide how to proceed with Greece concerning its financing needs and potential fiscal gap,” he said.

Talks on whether Greece has achieved a primary surplus and about the sustainability of the country’s debt will be held “at some point later next year,” Rehn said.

Eurogroup Chairman and Dutch Finance Minister Jeroen Dijsselbloem was also guarded, noting that no decision could be made on Greece until December when troika officials expect to have more comprehensive fiscal data.

The comments by the European officials came just a few hours after Stournaras said, in an interview to the Greek business daily Naftemporiki, that Greece would roll over 4.5 billion euros in debt next year to cover a shortfall in its financing needs. The minister said the problem could be more comprehensively tackled if European central banks roll over Greek debt worth 19 billion euros through 2016. He said European central banks had pledged to roll over Greek bonds in a November 2012 agreement.

“If they do not want to implement this because they consider it monetary financing, they must find equivalent measures,” Stournaras said, noting that this was an obligation of the central banks. “We have stuck to our promises up to now,” he said. “They must keep to theirs.”

In a related development Klaus Regling, the head of European Stability Mechanism, said Monday that there would be no problem disbursing to Greece the next tranche of rescue fund – a sum of 1 billion euros – this month, provided that the government make good on the so-called “prior actions” pledged to the troika including forced transfers and layoffs in the civil service and the overhaul of state defense and mining firms. Troika mission chiefs are expected to return to Athens to resume negotiations later this month.

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