New Greek aid may top 100 billion euros: report

June 4, 2011, 5:00 p.m. EDT

New Greek aid may top 100 billion euros: report

Figure is far higher than earlier forecasts, German magazine says

By Russ Britt, MarketWatch

LOS ANGELES (MarketWatch) — Greece may need a new aid package worth more than 100 billion euros to stay afloat, far higher than what was expected, according to a report Saturday.

In a preview of a story to run Monday, the German magazine Der Spiegel said on its web site that the package — the equivalent of $145.2 billion — could be necessary if the economically ravaged nation continued to rely on foreign aid through 2013 and 2014. That comes on top of the 110 billion euros, or $160 billion, in bailout funds agreed to last year.

Greece was expected to need another 60 billion to 70 billion euros, or $87 billion to $102 billion, in further aid. But Der Spiegel says the cost will rise when Greek government bonds need follow-up financing in 2014.

A translation of the magazine shows that it cites officials from the German Treasury, plus the troika of the European Union, the European Central Bank and the International Monetary Fund. Echoing other Euro-zone officials, German Deputy Finance Minister Joerg Asmussen said a new aid program will have to involve private-sector creditors.
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A steady flow of economic news will likely continue to drive European markets in the coming week and the corporate calendar is looking quieter, with highlights including a string of traffic updates from airlines including easyJet, Air France and Deutsche Lufthansa dotted throughout the week.

Meanwhile, euro-zone governments have agreed to a deal that will seek 30 billion euros, or $44 billion, from private-sector creditors, Dow Jones Newswires reported.

Seventeen governments in the zone will seek longer maturity from creditors for Greece’s debt. The process is to begin as early as July. A new Greek aid package is expected to be approved by Euro finance ministers at a meeting on June 20.

Word of the new bailout package came after stocks in Athens rose Friday. Greece’s finance ministry had said discussions with representatives of the EC, ECB and IMF troika concluded “positively.”

Greece has also made commitments to accelerate a privatization program to raise about 50 billion euros ($72 billion) by 2015, the statement said.

The country has made progress in fixing its economy but needs to institute broader reforms to reduce its deficit, it said, noting that representatives from the troika, expect the Greek economy to stabilize by the new year.

The troika has been in Athens conducting a review of the country’s finances and progress report on its implementations of reforms to achieve the 2011 deficit target, in exchange for the original 110 billion euro ($155 billion) bailout package.

“The Greek government has already made in the past few weeks public announcements on these issues reaffirming its commitment with specific decisions,” the Finance Ministry said in a prepared statement. “Relevant texts will be finalized in the coming days and will be submitted to Parliament following discussion and approval by the Council of Ministers.”

Russ Britt is the Los Angeles bureau chief for MarketWatch.

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