After putting his political career on the line and facing down an insurrection in his own government to force through the latest round of tough austerity measures, Greek Prime Minister must be feeling despair after the European Union dithers over releasing the next round of much needed loans.
According to an EU official the European Union’s finance ministers are unlikely to take a final decision on whether to release the next bout of desperately needed cash when they meet next Monday with other ministers claiming it could take weeks to come to a decision.
“Is there an expectation of a final decision on Monday? There is a very, very high degree of probability of a second round of discussions to finalise everything,” the official said on Friday. The official went onto to say that the ministers were aware that Greece needed the number in order to redeem several billion Euros worth of treasury bills maturing on the 16th of November.
As is common with the EU, dithering and delaying tactics appear to be the name of the game. If the funds are not granted then Greece will run out of cash and the social impacts will be catastrophic.
Tensions between Greece and Germany are sure to increase further after Wolfgang Schauble the German Finance minister, said that the Eurozone was not yet in a position to make a decision on releasing the funds, as many in Athens had hoped. Greece still has to pass its budget for 2013 while MPs in some countries, including Germany, have to authorise the release of funds. There is little chance of this happening before Eurozone finance ministers meet on Monday.
The official went on to say that the debt sustainability report by international lenders – the International monetary Fund, the European Commission and the European Central Bank called the troika – was not ready yet and was necessary for a decision on unfreezing the programme.
“The debt sustainability analysis is an integral part of the compliance report of the troika and only once there is agreement that the evolution of debt to GDP ratio over a given time period is sustainable, then and only then can we say that we are prepared to disburse,” the official said.
As a result of the EU’s decision the Euro has fallen to a fresh two-month low against the US Dollar as investors flocked to the safe haven currencies.
“You have a Greek political situation that looks more tenuous than it did 48 hours ago, and you have European ministers who will potentially hold off giving aid to them until later this month,” said Aroop Chatterjee a currency strategist at Barclays Plc in New York told Bloomberg.
The Pound to Euro exchange rate is currently trading at 1.2543
The Pound to US Dollar exchange rate is currently trading at 1.5962
The Pound to Australian Dollar exchange rate is currently trading at 1.5332
The Euro to US Dollar exchange rate is currently trading at 1.2728
The Euro to Pound exchange rate is currently trading at 0.7973
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