Greek bailout review due in next two days

May 31, 2011 - 5:59 AM

BRUSSELS (AP) — A review of Greece's bailout program that is central to determining further aid for the debt-ridden country will likely conclude over the next 24 to 48 hours, a European official said Tuesday.

Experts from the European Union, the European Central Bank and the International Monetary Fund have been in Athens for much of the past month, checking on the implementation of austerity measures and the privatization of state assets promised in return for euro110 billion ($157 billion) in emergency loans a year ago.

Their report will detail new austerity measures to lower this year's budget deficit and how to privatize state-owned real estate and corporate assets over coming years to help close financing gaps, said the official, who was speaking on condition of anonymity because discussions are still ongoing.

It has become clear in recent months that the loans granted last year will not be enough to keep Greece afloat over the next two years, as the country remains stuck in recession and locked out of international debt markets. Greece was supposed to raise some euro27 billion next year and a similar amount in 2013 to start covering some of its bills again, but with interest rates for 10-year bonds above 16 percent that prospect now seems unrealistic.

So far there is no consensus among eurozone countries on whether to give Greece new aid and how, despite increased pressure in recent days from the European Commission, the ECB and other financial leaders, the official said.

Many of the richer countries in the 17-nation eurozone are frustrated with Greece's slow implementation of the economic reforms and some euro50 billion in privatizations that were supposed to help its economy to start growing again. They want assurances that they will get their money back as their own taxpayers are unhappy with what they see as undeserved help for less disciplined countries.

In parallel to the review in Athens, representatives from eurozone finance ministries have been discussing how to improve implementation of Greece's promised measures.

"There are many ideas floating out there," said the official, adding that a final deal would have to be reached at a meeting of European finance ministers scheduled for June 20.

The ministry representatives, who will meet again Wednesday in Vienna, are discussing potential "technical assistance" for Greece in tax collection and the privatization program, the official said. Such international involvement in the internal financial affairs of a eurozone country would constitute an unprecedented intervention likely to face strong opposition within Greece.

On top of that, some countries have pushed for Greece to provide collateral for any further loans.

Earlier this month, European policymakers also raised the possibility of asking private creditors like banks and investment funds to give Greece more time to repay its bonds, but such a move has been strictly opposed by the ECB. Such a "reprofiling" of private debt is "not off the table" yet, the official said.