Rehn confident on next aid tranche
France’s Sarkozy urges European leaders to find a compromise on debt crisis to stabilize euro
Greece will receive its next aid payment in early July, while a consensus is emerging on how to involve private bondholders in a new rescue package, European Union Economic and Monetary Affairs Commissioner Olli Rehn said yesterday.
“We have been in very close contact with the IMF,” Rehn told Bloomberg.
“I’m confident we can conclude the review in the coming days, by Sunday, and we can thus take the decisions on the dis- bursement respectively in the two organizations, so this next disbursement can take place in early July.”
Greece is counting on 8.7 billion euros from Europe and 3.3 billion euros from the International Monetary Fund in July, while debate continues in European capitals over the content of a longer-term aid program.
“We will be able to avoid any default scenario,” Rehn said.
Bondholder involvement in the Greek aid package will be de- cided at a regular meeting of European finance ministers on July 11, he said.
“We will have to iron out the remaining differences as regards the nature of private sector involvement” at that meeting, Rehn said.
Greek bonds stabilized yesterday after Wednesday’s drop sent repercussions through world markets.
The yield on two-year Greek notes remained above 28 percent for the second day and rates on 10-year bonds rose 2 basis points to 17.75 percent.
The euro dropped to threeweek lows against the dollar and yen, and stocks fell in Europe and Asia.
Speaking yesterday at a conference of international farmers in Paris, French President Nicolas Sarkozy urged other European leaders to find a compromise on Greece’s debt crisis to stabilize the euro. “We must make these decisions now,” he stressed.
Sarkozy called on other EU leaders to make “necessary compromises” to “preserve the stability of the eurozone. Because without stability, no growth is possible.”
France’s three biggest banks are at risk of a credit downgrade because of exposure to Greek debt. European officials are talking about more aid to keep Greece from defaulting.
The Greek debt crisis is expected to be at the center of talks between Sarkozy and German Chancellor Angela Merkel today.