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Eurozone mulls new bailout loan for Greece

Group of euro finance ministers meeting in Brussels sound optimistic note about country's fiscal reforms and fresh loan.
Last Modified: 12 Nov 2012 14:22
Jean-Claude Juncker, right, has said he is 'totally opposed' to Greece being forced out of the 17-nation bloc [AFP]

Greece's international lenders have prepared a "positive" report on the country's reform efforts - a crucial step in efforts by Athens to secure a new bailout loan.

Jean-Claude Juncker, head of the group of finance ministers from the 17 euro countries and Luxembourg prime minister, said on Monday one key issue remained unresolved: how much time Greece will be given to reduce its debts.

Junker said eurozone ministers meeting in Brussels would discuss whether Greece should be given extra time to cut its debt to 120 per cent of its GDP beyond the original deadline of 2020.

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"The basis is positive, because the Greeks have really delivered," Juncker said.

Greece, which hopes for a new $40bn bailout loan, faces a bond repayment on Friday that it cannot afford.

Labouring under a mountain of debt and facing a gaping budget deficit, Greece has been relying on international bailout loans from the so-called troika of international lenders - the IMF, the European Central Bank, and the European Commission, which is the European Union's executive branch.

The country is mired in a deep recession heading into its sixth year, with more than a quarter of Greeks unemployed.

However, no decision on giving Greece the large new loan will be made on Monday because some eurozone parliaments must approve the deal.

Meanwhile, Greek legislators approved the country's 2013 austerity budget early on Monday, another essential step toward unblocking the new payment.

A spokesman said the European Commission welcomed the adoption of the budget.

"We'll still need to analyse in detail the final version of the bill ... Nonetheless, it very clearly meets another key condition for moving closer to a disbursement of the next tranche of financial assistance for Greece," Simon O'Connor, the spokesman, said.

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