Germany warns on Greece, banks

8th September 2011, Comments 0 comments

Germany's finance minister Thursday warned of "worrying news" coming from the eurozone and said Greece must fulfil the conditions required if it wants more help to combat its debt crisis.

Speaking in parliament, Wolfgang Schaeuble said it was "very important, especially given the worrying news from the eurozone, that the fund can, if necessary, release short-term funds to recapitalise banks."

"It is very important that we combat the danger of contagion in the banking sector by providing access to additional capital," he said.

And ratcheting up the pressure on Athens, Schaeuble said it was "very premature" to talk about a second bailout package for Greece before it had implemented the reforms required to receive its first full disbursement.

"The debate over a second aid package to Greece is very premature given the current difficulties around the payment of the first package," said the minister.

The European Union and International Monetary Fund bailed out debt-wracked Greece in May 2010 with a package worth 110 billion euros (155 billion dollars).

Athens was due to get its next eight-billion-euro payout from the fund later this month but must first demonstrate it has achieved the fiscal targets laid down by its international partners.

However, EU and IMF auditors promptly left Greece last week saying more work was needed, sending the markets crashing and raising fears that Greece would not live up to its fiscal promises.

In July, EU leaders agreed a second bailout package worth some 109 billion euros, this time with a one-off contribution from the private sector.

"We understand the problems in Greece. Reducing a deficit ... results in serious strains for the population concerned," he said.

"But at the end of the day, it is up to Greece itself to decide whether it is ready to take the necessary measures to reduce its deficit and its too-high debt," added Schaeuble.

Anger is growing in Germany, which contributes the lion's share of the guarantees for the rescue funds, over Greece's perceived backsliding in implementing reforms, with some politicians calling to Athens to leave the euro.

"The situation in Greece is serious," Schaeuble told deputies.

© 2011 AFP

0 Comments To This Article