No deal reached yet on Greek deficit target: ECB's Asmussen
October 25, 2012, 12:10 am TWN
FRANKFURT -- Greece's creditors have not yet struck a deal to give Athens two more years to rein in its runaway public deficit, a top European Central Bank official said on Wednesday.
Responding to newspaper reports of a draft deal with Greece's international creditors to grant the Greek government a grace period of an extra two years to get its finances in order, ECB executive board member Joerg Asmussen said no such agreement had been signed yet.
"I've read that too. There's still no definitive agreement between the troika and the Greek government," Asmussen told German public television.
"There's progress in Athens. But we're not there yet," he said.
"Logically speaking, one can say that Greece is in a position where its current revenues do not cover its current spending. That means that if the deficit targets are to be set back by two years, the other eurozone countries are going to have to put up additional money," Asmussen argued.
According to a report in the daily Sueddeutsche Zeitung, Athens will be allowed to cut its deficit to 3 percent of its gross domestic product in 2016 instead of the previous deadline of 2014.
The deadlines given to Greece to implement reforms to its job market and in the energy sector, as well as privatizations will also be relaxed, the newspaper said.
In addition, Prime Minister Antonis Samaras can count on the country's European partners to unlock a new tranche of desperately needed aid funds worth 31.5 billion euros (US$40.8 billion), the newspaper said.
Greece, heading for a sixth-straight year of recession, has been relying on rescue loans from the troika — the European Union, the European Central Bank and International Monetary Fund — to keep afloat and is negotiating with auditors representing the international creditors.
The Greek government has been pleading for extra time to implement tough austerity reforms required in exchange for aid loans.
Greece recently pledged 7.8 billion euros in cuts next year, only to be told by the troika that an effort of 9.2 billion euros is required to counterbalance the effects of a persistent recession.