Greeks may get extra time to hit deficit goals

Julian Harris
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EUROZONE leaders will grant Greece’s government the extra couple of years it requested to reach its deficit targets, a key document proposed last night.

Yet ongoing disagreements over the next tranche of Greek bailout cash caused crunch meetings to spill into the rest of this week.

Greece’s parliament voted through an austerity budget for 2013 last week, yet finance ministers from its euro area peers remain worried about reducing debt to sustainable levels.

Disagreements over the best way to achieve Greek debt sustainability have caused cracks to emerge from within the troika of bailout providers – the European Union, European Central Bank (ECB) and International Monetary Fund (IMF).

Eurogroup boss Jean-Claude Juncker sounded upbeat yesterday, but admitted early on that the meeting would not produce “any definitive decisions”, with leaders requiring further talks throughout the week.

And German finance minister Wolfgang Schaeuble sounded less positive. “I’d like to see if Greece has fulfilled all its obligations and then hear the troika report because it depends on the Greek government having found a solution with the troika, and I haven’t read anything on that.”

A draft copy of a memorandum of understanding revealed a crucial concession that may be granted to Greece. “The two-year extension of the adjustment period will mitigate the impact on the economy, while securing a sustainable fiscal position,” it read.

• The ECB has agreed to broaden the framework for allowing Greek banks to tap emergency loans from Greece’s national central bank, German daily Die Welt reported yesterday, citing central bank sources.

The net increase in available liquidity funding for Greek banks would allow them to buy more Greek sovereign bonds, helping Athens bridge a funding gap, the paper said in a pre-release of an article to run today.