EU's Rehn warns Greece over June payment: report

29th May 2011, Comments 0 comments

The EU will follow the IMF in blocking the June transfer of more Greek aid unless Athens does more to fix its public finances, economic affairs commissioner Olli Rehn was quoted as saying Sunday.

"We Europeans are setting the same conditions as the International Monetary Fund," Germany's Spiegel weekly quoted Rehn as saying in comments published in German. "The situation is very serious."

He said the European Union would decide after examining the latest quarterly audit of Greek public finances by experts from the European Central Bank, the EU and IMF -- which Spiegel said would include some "alarming" findings.

The audit will say that Athens is missing all budget promises made last year in return for an EU-IMF 110-billion-euro ($156-billion) rescue, Spiegel reported, without saying where it got the information.

The IMF warned Greece on Thursday to firm up its broad financing plans and policy actions to be able to continue receiving bailout funds, calling for "assurances" on how Athens will fund its future.

Luxembourg Prime Minister Jean-Claude Juncker, who heads the eurozone finance ministers, warned that the IMF may block the next 12-billion-euro instalment.

He said the fifth tranche in a 110-billion-euro loan package could be hampered by IMF rules forbidding the lender of last resort to release funds without a 12-month guarantee of solvency.

On Friday, Greek political leaders failed to agree on further austerity measures but Prime Minister George Papandreou went on national television to say his government would "take the necessary measures."

Greece was the first of three members of the 17-nation eurozone to need a multi-billion-euro bailout. Ireland and Portugal have since followed suit and markets fear that Spain might eventually need help too.

© 2011 AFP

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