Disagreement has broken out between the EU’s economic and monetary commissioner Olli Rehn and German Finance Minister Wolfgang Scaeuble as to whether Greece will require a third set of bailout funds.
On Tuesday Schaeuble said that he believes Greece will need another bailout if it is to plug a funding gap. The amount needed for another bailout is expected to be far lower than previous instalments already granted by the troika of the International Monetary Fund, European Union and European Central Bank. Last month an IMF report predicted that Greece will need a further €11 billion next year.
Schaubles comments come at a sensitive time for the German government which is campaigning to win elections due to be held in five weeks time. The issue of Germany’s contributions to bailout funds to other EU members has been a sore point amongst German voters. German leader Angela Merkel said recently that it was too early to talk about funding as she hopes to avoid the tenuous subject as she runs her re-election campaign.
Olli Rehn meanwhile refused to rule out a bailout. However, Rehn did say that there are other ways to keep Greece’s aid programme going. He suggested that the troika could extend the repayment schedule on existing loans.
The troika of lenders will review the aid programme in the autumn.
“Then we will also review Greece’s programme’s possible continuation and financing. The debt sustainability can be improved, for instance, by extending the loan periods,” the Finnish Helsingin Sanomat newspaper quoted Mr Rehn as saying on Wednesday.
Uncertainty over whether Greece will receive another bailout has weighed upon the Euro in Wednesday’s session. Against the Pound the single currency slumped to a seven-week low. Also weighing upon the currency is the uncertainty in the markets regarding the release of the Federal Reserve minutes for its July policy meeting.
Euro (EUR) Exchange Rates
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3404 <
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8542
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6907 >
The Euro/ Canadian Dollar Exchange Rate is currently in the region of: 1.3981 >