Eurozone nations vow closer oversight
By Aoife White |
April 19, 2010, Monday
|
Print Edition
Print Edition
EUROZONE nations agreed to tighten joint oversight of the economies in Europe's currency union in an effort to stem a government debt crisis that has already forced them to make billions of euros in standby loans available to troubled Greece if it can't borrow from markets.
Jean-Claude Juncker, the head of a group of finance ministers from the 16 countries that use the euro, said last Friday that they would start discussing how member economies were faring, as a step toward tackling wider problems beyond the group's limited focus on debt and deficit levels.
Spain and Finland would come up for review first, followed by Portugal and Luxembourg, he said.
Spain and Portugal have rising debt levels and have attracted attention from markets looking to see if Greece's debt problems could spread to other vulnerable euro economies which are facing high unemployment and sluggish economic growth.
Portugal received a warning from the European Union's executive commission last week that it might need to make bigger budget cuts if a hoped-for economic recovery fails to give extra revenue the government is counting on.
Markets have hiked Greek borrowing costs because they believe the country might be unable to repay debt. Greece needs to borrow some 54 billion euros (US$73 billion) this year, 11 billion euros of that next month and says the high costs could force it to seek a bailout from eurozone nations and the International Monetary Fund.
It has got a pledge for some 30 billion euros in loans from other eurozone nations - with possibly another 15 billion euros from the IMF yet to be agreed.
The government has called in EU and IMF officials for Athens talks today but insists that this is not a signal that it will formally request a bailout within days.
Greece had an opportunity to trigger the financial lifeline at the Madrid talks between eurozone finance ministers on Friday - but did not use it. Juncker said they "didn't put forward a request."
Greece had hoped that news of the last-resort loans would reassure markets. Initially it did - but spreads, or the difference between interest rates, widened in recent days after Germany said its share, the largest at 8.4 billion euros, would require lengthy parliament approval.
Jean-Claude Juncker, the head of a group of finance ministers from the 16 countries that use the euro, said last Friday that they would start discussing how member economies were faring, as a step toward tackling wider problems beyond the group's limited focus on debt and deficit levels.
Spain and Finland would come up for review first, followed by Portugal and Luxembourg, he said.
Spain and Portugal have rising debt levels and have attracted attention from markets looking to see if Greece's debt problems could spread to other vulnerable euro economies which are facing high unemployment and sluggish economic growth.
Portugal received a warning from the European Union's executive commission last week that it might need to make bigger budget cuts if a hoped-for economic recovery fails to give extra revenue the government is counting on.
Markets have hiked Greek borrowing costs because they believe the country might be unable to repay debt. Greece needs to borrow some 54 billion euros (US$73 billion) this year, 11 billion euros of that next month and says the high costs could force it to seek a bailout from eurozone nations and the International Monetary Fund.
It has got a pledge for some 30 billion euros in loans from other eurozone nations - with possibly another 15 billion euros from the IMF yet to be agreed.
The government has called in EU and IMF officials for Athens talks today but insists that this is not a signal that it will formally request a bailout within days.
Greece had an opportunity to trigger the financial lifeline at the Madrid talks between eurozone finance ministers on Friday - but did not use it. Juncker said they "didn't put forward a request."
Greece had hoped that news of the last-resort loans would reassure markets. Initially it did - but spreads, or the difference between interest rates, widened in recent days after Germany said its share, the largest at 8.4 billion euros, would require lengthy parliament approval.
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