Uncertainty remains over Greece
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E-mail Xinhua, February 14, 2012
Greece must make more efforts to avoid a disorderly debt default which would cause "devastating consequences" for Greece and the rest of Europe, the top economic official of the European Union (EU) said Monday.
EU Economic and Monetary Affairs Commissioner Olli Rehn made the comments at a press conference after the Greek lawmakers late Sunday approved a tough austerity package aimed at averting a default.
Cautious welcome
Rehn welcomed Greek parliament's vote in favor of the the second bailout program which includes lowering the minimum wage by 22 percent and axing 150,000 public sector jobs, telling reporters that " the vote is a crucial step toward the adoption of the second program."
Rehn warned of the catastrophic effects of a disorderly default in Greece which "would be a much worse outcome with devastating consequences for Greek society," and of the knock-on effects for the rest of Europe if Greece was not granted the emergency funding.
Before the vote, Greek Prime Minister Lucas Papademos warned the 3.3-billion-euro package of cuts was "the only alternative to a catastrophic default that would force Greece, sooner or later, to leave the euro," saying that "the social cost of this package is limited in comparison with the social and economic disaster that would follow if it is not adopted."
However, Rehn said "It will still take time and effort by the Greek society" to avoid a disorderly default.
The Greek government needs come up with a further budget saving of 325 million euros (about 430 million U.S. dollars), and Greece's major political parties' leaders must make clear commitment to the reforms outlined in the bailout program, said Rehn.
He expected the two demands to be met by Wednesday when eurozone finance ministers are scheduled to meet to discuss and possibly approve the bailout program.
The 130-billion-euro bailout package, offered by the "troika," namely the International Monetary Fund (IMF), the European Union and the European Central Bank, is crucial for Greece to avoid default or a potential exit from the eurozone on March 20 when 14.5 billion euro of bonds come due.
Due to Greece's failure to implement most of the reforms agreed in the first bailout program approved in 2010, international creditors have been insisting that major political parties in the Greek coalition government make firm commitment to carry out the reforms regardless of who wins the upcoming election.
German Finance Minister Wolfgang Schaeuble told local media during the weekend that Greece needs to do its homework first before it can get the bailout loans.
"It's important to say that it cannot be a bottomless pit. That's why the Greeks have to finally close that pit. People are now starting to realize it won't work with a bottomless pit," Schaeuble said.
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