Finance – Germany’S Third Financial Redemption Package To Greece

Germany proposes a third financial redemption package to Greece. An indication to this effect has been given by Germany on the proviso that the debt-ridden Greece faithfully completes all the “stringent economy drives” in a bid to tackle mounting unemployment and dropping GDP. Size of the loan, as leaked out from the finance ministry’s document on the subject, is likely to be € 10bn-€20bn (i.e. £8bn-£16bn), as per the German Weekly, Der Spiegel.

No less a person than Wolfgang Schauble, the German finance minister has commented in an exclusive interview due for release this Monday on the loan amount, saying that any further loan needed by Greece would be only smaller, which would be more sufficient considering the hitherto-received €240 bn bailout. He further reiterated the sufficiency of this low size loan proposal during his interview to the local financial magazine Wirtschaftswoche as a public relations strategy for shaping public opinion in favour of the present loan.

But, notwithstanding receiving rich financial packages, Greece remains still financially shaky in the European Union, causing concern to member states. So secret confabulations were held between Germany and other EU members as a result of which this third relief package is given shape.

Two key issues are believed to have been discussed on the sidelines of an EU congregation held last week-one is the need for meeting out the imminent shortfall in Greece’s financing, and the other is its apathy to implement the long pending financial reforms. Dismayed over this inactivity of Athens, credit agencies such as the International Monetary Fund (IMF), European Central Bank and EU are not enthusiastic to make moves for helping the country financially.

Foreign creditors have estimated still a financial gap of € 16bn to continue threatening the country over the next two years; this is so, despite Germany extending many loans to Greece in crisis times earlier.

But, overall opinions differ over the method of bailout for Greece.

A spokesman of German finance ministry, agreeing with finance minister Schauble, scoffed any restructuring proposals, contending no new situation has emerged warranting any such thing now.

But, according to the shadow development minister and economic professor Giorgos Stathakis, what Greece needs is only loan restructuring, not any loans. Some IMF personnel say that a stage has come when there’s is no way for fiscal adjustments, and that there’s no room for any more slashing, nor for levy of new taxes, and that Greece will insist on debt adjustments only. In short IMF is not agreeing for any loan write-offs. And going by past parleys’ notings, opinion on Greece’s bailout package is very much divided. Countries like Brazil, China and India too are highly sceptical on this.