German Finance Minister Wolfgang Schaeuble said on Tuesday that Greece will need a third economic rescue package, appearing to depart from the line of pre-election campaigning being followed by Chancellor Angela Merkel, but dousing speculation about a possible shift in Berlin’s position on possible debt relief for Greece.
“There will have to be another program for Greece,” Schaeuble said without providing any details and repeating Berlin’s opposition to an additional debt haircut for Greece.
Schaeuble’s move appeared aimed at stopping spiraling debate about the possibility of a second debt haircut for Greece, following last year’s private debt writedown. Although he did not elaborate on what a third program might entail, it is believed that it would be a small package designed to help Greece cover a funding shortfall for 2014-16. That shortfall is estimated at around 10.9 billion euros, according to the International Monetary Fund, which, together with the European Commission and the European Central Bank, has granted Greece two foreign rescue funds worth a total of 240 billion euros over the past three years.
Ministry officials have said that the government is already examining ways of plugging the anticipated funding gap. Authorities are expected to use leftover funding from the recapitalization of Greek banks. They also hope to benefit from a possible new reduction to the interest rate which Greece pays on its loans. And a return to the markets in 2014 would allow Greece to raise additional revenue. As a result, sources estimate that Greece would only need to seek an additional 5 billion euros in funding from its eurozone partners.
Although Schaeuble has suggested several times before that an additional program might be necessary for Greece, Tuesday was the first time he said it outright. His statement, made during a speech to a campaign audience in Ahrensburg, northern Germany, raised questions about a possible shift in Germany’s position on the prospect of debt relief for Greece though government sources in Berlin insisted that nothing had changed.
Meanwhile ECB executive board member Joerg Asmussen is due in Athens on Wednesday for talks with Finance Minister Yannis Stournaras that will be watched closely. The two men are scheduled to meet at 3 p.m. while Asmussen is also expected to meet with Greek bankers and probably also with Prime Minister Antonis Samaras.
The German official, formerly a close aide of Merkel as her deputy finance minister, is visiting Athens to discuss the progress of reforms ahead of the troika’s scheduled return to Athens next month, the ECB said in a statement released on Tuesday. “In the runup to the next troika review mission, ECB executive board member Joerg Asmussen will visit Athens for bilateral meetings with Greek policymakers and representatives of society and the business community to discuss the Greek adjustment program and wider euro-area developments,” the statement said.