When? July - New bailout in July - EU: Greece to Get Next Aid Payout ...

Thursday, June 16, 2011

EU: Greece to get next aid payout

Brussels, The European Union's top economic official says he expects eurozone finance ministers to sign off on the payout of euro12 billion ($17 billion) in aid for Greece on Sunday and decide on a new bailout in July.

Olli Rehn said Thursday that such a two-step approach "means that the funding of the Greek sovereign debt can now be ensured until September, while we take the decisions for the medium-term, beyond September, in July."

Rehn said he expected those decisions to come in agreement with the International Monetary Fund, which had previously said it can't pay its part of the next aid installment without assurance over Greece's long-term financing.

Rehn said it was "regrettable that the efforts to build national unity (in Greece) failed yesterday," but that he still expected parliament to pass new austerity measures.

__earlier info._

The escalating political crisis in Greece sent shockwaves through markets Thursday and fueled a sense of inevitability that the eurozone is about to face its first debt default.

While Greek Prime Minister George Papandreou is preparing to reshuffle his government in an attempt to get austerity measures through Parliament, European policymakers expressed their dismay as they prepare for what could be a crucial meeting of EU leaders in a week's time.

"What we need most today, is unity," said French President Nicolas Sarkozy. "We have to leave the national fights behind us to find our sense of common destiny again."
As events unfolded and uncertainty grew, experts became increasingly convinced that some form of debt default by Greece is now inevitable.

If Papandreou does not get his austerity plan approved, the country won't get its next rescue loans and would have to renege on its debt obligations.

But in order to help Greece, some form of default may also be required. In recent weeks, Europe's top financial authorities have been at loggerheads over how to get private creditors to share the pain, a move experts say could be considered a default.

That could heap massive pressure on the continent's banks, particularly if investors become convinced that other bailout recipients Ireland and Portugal will be next.

A European Central Bank official warned that the EU's crisis bailout fund would have to double to euro1.5 trillion ($2.1 trillion) if Greece fails to pays its debts, spreading financial turmoil.

Nout Wellink told Dutch paper Het Financieele Dagblad that "if you fall through the ice you better have a very large safety net."

European officials are talking about more aid to keep Greece from defaulting but the political chaos has thrown everything into question. And the uncertainty has hit sentiment in markets around the world.

"Talk of the bailout fund being doubled in size, a Greek government reshuffle, and Greek PM Papandreou offering to resign, doesn't offer a stable back drop for investors," said Michael Hewson, market analyst at CMC Markets.

Stock markets across Europe fell sharply on Thursday, a day after they suffered big losses as protests in Athens turned violent and Papandreou sought, but ultimately, failed to create a coalition government, even offering up his job in the bargain.

http://news.yahoo.com/s/ap/20110616/ap_on_bi_ge/eu_europe_financial_crisis