–Adds Quotes On Greece Debt Repayment Ability, Options For Handling It

ATHENS (MNI) – The European Central Bank, the European Commission
and the International Monetary Fund are prepared to discuss a possible
extension of the emergency lending agreement signed with Greece last
May, their representatives said today.

Speaking at a press conference in Athens, after they concluded
their third official followup inspection of the Greek economy, the
officials of the so-called “troika” said there was a question mark over
Greece’s ability to refinance its obligations after 2013, when the
current agreement expires.

IMF representative Poul Thomsen revealed that discussions about how
to handle the situation are ongoing, and various contingency plans have
been proposed regarding the period from 2014 onwards. The options
include extending the payment term on the current agreement or issuing
new financing after the current program expires, he said. He did not
elaborate.

“We are going to have significant debt service payments as the
program ends,” Thomsen said. “We are confident that Greece will return
to the markets in the programmed period. But whether it would be able to
return to market on a scale that will allow it to borrow not only to
roll over its obligations to the markets but also to its IMF-EMU
partners — that is admittedly a question.”

He added: “We are aware of the issue and we are aware it is an
issue of concern for the markets. We have various options for dealing
with it. We could have a longer repayment period…Another option is of
course follow-up loans when the current one is due.”

Thomsen said he and his colleagues hoped that by the time Greece
must pay off its loans to the EU and the IMF, it would have sufficient
market access to do so. However, “if that proves to be a question we
stand ready,” he added.

The EMU-IMF delegation said that the Greek government is committed
to taking all additional measures that may be needed in order to achieve
its deficit targets for 2011. And they made clear that extra measures
will indeed be needed in order to cut the 2011 budget deficit enough to
continue receiving the emergency aid, which totals E110 billion.

They said those measures must cover the revenue shortfall for 2010,
as well as the gap created by Eurostat’s recent upward revision of the
2009 deficit.

They also said that the Greek lending program is at a critical
juncture and that structural reforms in health care, the broader public
sector, and the taxation system must be implemented.

The IMF has indicated that from its point of view Greece has made
enough progress to warrant a third instalment of the loan. But the
European Commission and ECB have no authority to approve the EU’s
portion of the third tranche. That decision must be taken by Eurozone
finance ministers, known as the Eurogroup, at their next meeting in
December.

The third tranche, including both the IMF and EU contributions, is
expected to total E9 billion.

Asked to clarify whether a positive report from EU officials on the
ground in Athens could guarantee a green light by the Eurogroup,
Commission official Servas Deroose said he could not speak on behalf of
the Eurozone countries.

Indeed, there is at least a small question mark over the EU’s
portion of the loan this time around, since Austrian Finance Minister
Josef Proel recently said Austria would withhold its contribution —
about E190 million — until it saw proof that Greece was properly
implementing the required measures.

Greece has pledged to trim its deficit to 7.5% of GDP next year,
from a promised 8.1% this year. However, it is expected to miss that
2010 target because of the large upward revision to its 2009 deficit
figure.

–Angelika Papamiltiadou, a_papamiltiadou@hotmail.com

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