Brussels, 16/05/2011 (Agence Europe) - In Brussels on Monday 16 May, eurozone finance ministers attempted to ignore the hullabaloo surrounding the arrest in New York on Sunday 15 May of the director general of the International Monetary Fund, Dominique Strauss-Kahn (see separate article). Reacting to what he described as dreadful news from New York, German Finance Minister Wolfgang Schäuble rejected the idea that the event was in any way connected with the eurozone sovereign debt crisis. French Finance Minister Christine Lagarde, whose name has been circulating as a possible replacement for Strauss-Kahn at the head of the IMF, said that dialogue between the European Central Bank, European Commission and International Monetary Fund was continuing and the IMF would of course be represented at the Eurogroup meeting, adding that there were serious problems to be discussed, like the Portuguese aid plan and funding for Greece.
The European Commission repeated its hostility to the idea of “restructuring” Greece's national debt. An international creditor fact-finding mission is currently in Athens to review implementation of the Greek austerity programme and the country's debt. It criticised comments in the media that “soft restructuring” of the Greek debt might be on the cards (see EUROPE 10374). On Sunday, Schäuble said clear rules were needed to ensure that all Greece's creditors, including the private sector, would be involved if the country's debt were rescheduled Germany is reported to be amenable to conditionally extending the loans to Greece, whose economy is now in recession. Greek newspapers report that the government needs €60 billion more to cover finance needs next year. Welcoming what it described as Greece's “unprecedented” budget-tightening (cutting the public deficit by 7% in a single year), the Commission said the country needed to implement structural reforms and a privatisation of state assets that is expected to net some €50 billion over five years. Greece's creditors are reportedly calling for the state to sell off all public utilities companies. Decisions about extra funding are not expected until the June 2011 publication of the outcome of the Commission/ECB/IMF fact-finding mission.
Now that Finland has officially agreed to the idea of bailing out Portugal, the Eurogroup is expected to endorse the austerity measures demanded of Portugal in return for loans of €78 billion (see EUROPE 10375). It remains to be seen how the additional demands on Portugal (formulated by Finland) will go down. (M.B./transl.fl)