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A new ray of hope for Athens
A new ray of hope for Athens
Cerstin Gammelin, Brussels, and Claus Hulverscheidt

BERLIN - The euro zone has granted Athens two more years to rein in its debt, Süddeutsche Zeitung has learned.

Euro zone leaders have agreed to give Greece until 2016 instead of 2014 to push deficits down under to 3% of GDP. Deadlines for the implementation of employment and energy reforms and the selling of state-run companies and state-owned property have also been extended.

Greek Prime Minister Antonis Samaras can now count on his euro zone partners to free shortly the urgently needed next tranche of aid worth 32 billion euros.

Athens is projecting a sum of 8.8 billion euros (instead of the estimated 19 billion euros) from privatization income by the end of 2015, according to the draft of a Memorandum of Understandingthat the Greeks hammered out with their international creditors.

On Tuesday it was still unclear, however, how the holes in the 2013 and 2014 budgets that the concessions bring with them are supposed to be closed. An additional 15-18 billion euros are now needed. The question of how Greece is supposed to finance itself after 2014 also remains open.

The reason for the concessions lies not only with the fact that Greece is courageously implementing reforms, but that new financial problems are due less to a lack of political will than to the deep recession Greece now finds itself in – something that the other states had not expected. Additionally, German Chancellor Angela Merkel and other EU heads of government believe it is too risky economically to throw Greece out of the euro zone.

Unless Greece receives the next tranche of aid, it will not be solvent by the end of November. Before the money is transferred, however, the EU Commission, European Central Bank and International Monetary Fund (IMF) troika’s complete report about Greece’s situation must be available and the Memorandum of Understanding signed.

To deal with the extra 18 billion euros, Brussels is considering giving Athens additional funds to buy old government bonds that are being traded way under value. An indirect debt cut whereby the interest rate for already extended credit would be lowered is also under discussion.

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