German authorities are hopeful that eurozone governments will approve the financial program of support for Greece, worth 130 billion euros in the next few days and the plan to cut Greek debt to private creditors will follow its course. German Chancellor Angela Merkel, Italian Prime Minister Mario Monti and Greek Prime Minister Lucas Papademos discussed Friday during a video conference about the second rescue program and are hopeful that eurozone finance ministers will find, at the meeting on Monday, a solution to issues still under discussion, said Steffen Seibert, Merkel’s spokesman.
“We expect the Greeks to live up to their responsibilities. Next Monday, we’ll see if Greece will confirm expectations or we will have to decide to go a different way, one which is not desirable”, said Steffen Kampeter Thursday, Secretary of State at the German Ministry of Finance.
Greece must urgently conclude agreements with EU and private creditors, given that in March it has to redeem bonds of 14.5 billion euros. Merkel was distracted Friday from the anti-crisis agenda by the resignation of President of Germany, Christian Wulff, following a corruption scandal.
Euro and global developments evolved as investors were anticipating the completion of negotiations of the last seven months for the second program to save Greece.
Greek parliament approved this month the austerity measures necessary for the support from the EU and IMF, but sources close to negotiations said that, without new spending cuts, Greek debt will be reduced only to 129% of GDP by 2020, instead of the target of 120%. Late last year, Greek debt was 160% of GDP. European authorities also talk about reducing interest rates for Greece, from about 4% today, to limit debt growth.
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