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Europe
Warning sounded on Greece bailout
Merkel and Sarkozy say rescue package must be finalised in order to ensure the country receives next tranche of funds.
Last Modified: 09 Jan 2012 16:56

German Chancellor Angela Merkel has said that Greece is in danger of losing the next tranche of its financial bailout if rapid progress is not made on its latest rescue package, including the voluntary restructuring of Greek debt held by private creditors.

Merkel was speaking at a joint news conference on Monday in Berlin after meeting with Nicolas Sarkozy, the French president, to discuss ways to boost growth in eurozone states, which are struggling with rising sovereign debt and unemployment.

"We must see progress on the voluntary restructuring of Greek debt," Merkel said. "From our point of view, the second Greek aid package including this restructuring, must be in place quickly. Otherwise it won't be possible to pay out the next tranche for Greece."

"We want for Greece to remain in the eurozone," Merkel said.

Sarkozy and Merkel said that their countries were also looking into ways to speed up payments into the eurozone's permanent bailout scheme  - the European Stability Mechanism.

On Monday, the European Central Bank reported that it had upped purchases of government bonds to $1.4 billion as part of its efforts to combat the eurozone's debt crisis. The purchases were concentrated on Spain and Italy, and were up $587 million from the week before.

Financial tax 'possible'

On the proposal for a controversial financial transaction tax, which Britain has strongly opposed, Merkel said that she could see the possibility of the tax being imposed at the level of the eurozone, which the UK is not a member of.

Merkel told the press that she "personally" could imagine "such a tax at the level of the eurozone" only, after France
voiced its readiness to go it alone.

Follow our comprehensive Euro Crisis spotlight coverage

Sarkozy set a deadline of March 1 for a new European accord to enforce tighter budgetary discipline to be agreed to by member countries.

Merkel said resolving the crisis would be a "step-by-step [process] ...  there is no single dimension solution".

Merkel is due to meet Christine Lagarde, the chief of the International Monetary Fund, on Tuesday in Berlin for "an informal exchange of views" on the crisis, her office said. Merkel said the Greek bailout would also be discussed during that meeting.

Sarkozy and Merkel's first meeting of the new year comes in advance of Mario Monti's first visit as the Italian prime minister to Berlin on Wednesday.

The EU is continuing to work on implementing tougher budget rules on the weaker nations of the 17-member eurozone, many of whom are dealing with high borrowing costs.

Merkel and Sarkozy are due to travel to Italy on January 20 ahead of a European summit at the end of the month.

Herman Van Rompuy, the EU's president, meanwhile, said on Monday that the recent decline in the euro exchange rate could help spur eurozone exports and thereby help drive economic growth.

Source:
Al Jazeera and agencies
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