Forex News – ECOFIN pressures Greece to pass reforms before receiving more aid

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Forex Asia Review - Euro temporarily retreats from recent losses; Euro debt woes still persistThe Economic and Financial Affairs Council (ECOFIN) is undergoing meetings all day today and Greek debt is the main agenda. Euro zone finance ministers reiterated their view that Greece must first act before receiving additional loans. EU officials are delaying their decision on extending the next tranche of Greek bailout funds to early July. They said Greece will first have to pass new laws on fiscal reforms and start privatization of government agencies before a final decision is made on a further 12 billion euros in loans.

ECOFIN is the Eurozone’s broadest financial decision making body. The council coordinates economic policies of the 27 member states, and their decisions can have a widespread effect on the Eurozone’s economic health.

Before launching a second day of meetings on Greece, the EU ministers indicated that the next tranche of EU-IMF-ECB aid will most likely be paid by mid-July, which will prevent a default by Greece. However, they said Athens had to show progress first on plans to cut spending, raise taxes and begin privatizations of government agencies.

“We are waiting for a decision from the Greek parliament. We are calling for not just the government, but the Greek opposition to support the plan,” Belgian Finance Minister Didier Reynders said before the meetings resumed in Luxembourg.

“We are increasing the pressure because there are precedents,” he said, referring to Greece’s previous failures to meet commitments and the issuing of false statistics. “We have to be sure that everyone is going to support the plan.”

Meanwhile, as the ECOFIN meetings are going on, anti-austerity demonstrators are gathered in Athens to protest new austerity measures while the Greek parliament debated these highly unpopular measures.

On Sunday, Prime Minister George Papandreou asked Greeks to support the austerity steps and avoid a “catastrophic” default, appealing for the nation to accept measures that certainly in the short-term will make life harder for most citizens.

“The consequences of a violent bankruptcy or exit from the euro would be immediately catastrophic for households, the banks and the country’s credibility,” Papandreou said at the start of a confidence debate on his new crisis cabinet.