The Latest: US Treasury chief Lew: Creditors must make sure Greece's debts are manageable | iNFOnews | Thompson-Okanagan's News Source

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The Latest: US Treasury chief Lew: Creditors must make sure Greece's debts are manageable

A flower is placed in the shirt pocket of pensioner as he waits for the opening of the national bank of Greece in central Athens, Thursday, July 16, 2015. Greece’s troubled left-wing government is seeking urgent relief from European lenders on Thursday, after it pushed a harsh austerity package thought parliament, triggering a revolt in the ruling party and violent demonstrations in central Athens. (AP Photo/Emilio Morenatti)
July 16, 2015 - 1:57 PM

ATHENS, Greece - The latest on Greece's financial crisis (all times local):


11:45 p.m.

U.S. Treasury Secretary Jacob Lew is urging Greece's creditors to make sure the struggling country emerges from negotiations with debts it can manage.

The International Monetary Fund has already labeled Greece's debts unsustainable and called for generous debt relief.

Lew met Thursday with German Finance Minister Wolfgang Schaueble in Berlin and French Finance Minister Michel Sapin in Paris. He expressed support for the Greek debt deal, saying it restores trust between Greece and its creditors and could help keep Greece in the common euro currency.

Lew, in telephone calls with Greek Prime Minister Alexis Tsipras and Finance Minister Euclid Tsakalotos, urged the Greeks to "fully" implement the budget cuts and economic reforms they had agreed to.


11 p.m.

The head of euro-region finance ministers, Jeroen Dijsselbloem, is seeking to ease concerns over a new financing deal for Greece.

Dijsselbloem said European Union members not using the shared euro currency would be given guarantees for contributing to a bridging loan for Greece. The move follows strong objections raised by Britain toward helping bail out a eurozone member.

The EU has 28 nations but only 19 of them, including Greece, use the euro. Greece got a bridge loan so it can make a 4.2 billion-euro ($4.6 billion) payment to the European Central Bank on Monday.

Dijsselbloem, who was meeting in Berlin with German lawmakers late Thursday, also shot down talk of continued support for a Greek euro exit by German Finance Minister Wolfgang Schaeuble.

He said: "If you reach an agreement after such long and hard talks, you have to stand behind it. And that goes for all sides."


9:55 p.m.

Greece's government says thecountry's banks will reopen Monday after being closed for three weeks but cautioned thatrestrictions on withdrawals would only be lifted gradually. Deputy Finance Minister Dimitris Mardas made in the announcement Thursday evening on state-run ERT television.

Banks were closed June 29 to stop mass cash withdrawals from triggering their collapse. The decision to reopen them was announced hours after the European CentralBank increased its emergency cash support to Greek lenders. Mardas saidbanks would likely to switch to a more relaxed weekly limit after reopening, instead of imposing a daily ATM withdrawal cap. Greeks now can only take out 60 euros ($67) a day.


8:00 p.m.

Britain's Treasury chief says the country has agreed to allow emergency funding for Greece through an EU bailout fund after receiving guarantees for protections for the U.K.

European Commission President Jean-Claude Juncker had earlier announced that the European Union had agreed on a short-term loan to help Greece cover its debts until mid-August.

Britain had been reluctant to allow the use of an EU fund for what it considers to be an issue of the smaller 19-country eurozone. Britain is not in the eurozone.

George Osborne says Thursday that no taxpayer money will be at risk as Britain and other non-euro states received "protections" for their contributions to the EU fund.

He said: "These have been tough talks, but the agreement announced this evening means an impregnable ring-fence around British taxpayers' money, which will not be at risk in any way in this emergency financing for Greece."


7:15 p.m.

A Greek government official says an expected Cabinet reshuffle will not be announced on Thursday.

Prime Minister Alexis Tsipras is expected to reshuffle his cabinet after a Parliamentary vote on an austerity bill early Thursday saw large numbers of his radical left Syriza party lawmakers vote against him, including prominent ministers.

Those who voted against the bill included Energy Minister Panagiotis Lafazanis and Deputy Welfare Minister Dimitris Stratoulis, while the alternate finance minister, Nadia Valavani, resigned ahead of the vote saying she could not support the bill.


6:55 p.m.

The eurozone's top official, Jeroen Dijsselbloem, says a short-term EU loan to Greece would allow the country to pay arrears it owes to the International Monetary Fund so the IMF can rejoin negotiations on a third bailout for the country.

Dijsselbloem was speaking to Dutch lawmakers Thursday, as European Commission President Jean-Claude Juncker announced that the European Union had agreed on a short-term loan to help Greece cover its debts until mid-August. Juncker didn't specify how much Greece would receive.

Dijsselbloem says that with the loan in place Greece will be able to pay back arrears it owes the IMF by Monday at the latest.

"That means the IMF will again be fully engaged."

Greece has been in arrears to the IMF since June 30, when it failed to make a loan repayment.


5:35 p.m.

Greece's interior minister says the government is likely to call an early election in the fall, after losing support in parliament for an austerity law.

Nikos Voutsis said the left-wing government narrowly avoided collapse in the vote early Thursday that was a key requirement for a third Greek bailout.

Voutsis told Sto Kokkino radio that elections are "very likely" and that if they don't take place in September, then it'll be October.

The austerity bill was approved with opposition party support, but the ruling Syriza party saw 38 of its 149 lawmakers defy Prime Minister Alexis Tsipras by either voting against or abstaining.

Voutsis said the government could have collapsed if the number of dissenters had risen to 42 — that would have made it more difficult for Syriza to legislate.


5:05 p.m.

The European Commission president says the European Union has agreed on a short-term loan to Greece until mid-August.

Jean-Claude Juncker says European finance ministers on Thursday hammered out the deal that will help Greece meet its immediate financial needs and debt obligations. The deal involves the EU's emergency funding program — the European Financial Stabilisation Mechanism, or EFSM.

Juncker didn't specify how much Greece would receive.

Without that loan, Greece didn't have the money to make a 4.2 billion-euro ($4.6 billion) payment to the European Central Bank that is due Monday.

(Corrects that Juncker said loan is from European Union, not eurozone members).


4:55 p.m.

The European Commission's top official says he believes the deal that Greece has reached with its creditors will eventually pull the country out of its financial abyss.

Jean-Claude Juncker says the deal will be successful "under the assumption that the whole program will be implemented." Junker also said "others should take note" of Cyprus' full implementation of its 2013 bailout deal that "paid off."


4:15 p.m.

In its statement saying it had made the decision to start 'in principle' talks on a three-year bailout of Greece, the eurogroup of finance ministers made no mention of any short-term bridge loan to the cash-strapped country.

Greece doesn't have the money to make a 4.2 billion-euro ($4.6 billion) payment to the European Central Bank on Monday.

European authorities, including the eurogroup, are working out how to get it some short-term cash to make that payment and avoid a default. How to get Athens the money is proving difficult.

The eurogroup said bailout talks could begin in the wake of the Greek parliament's decision to back a raft of austerity measures early Thursday.

Still, a few hurdles need to be cleared including parliamentary votes elsewhere in the eurozone. Greece also has to adopt a second set of measures on July 22.


4:05 p.m.

Greece got a double dose of good news Thursday when the European Central Bank decided to raise the amount of emergency liquidity available to Greek banks and the country's creditors in the 19-country eurozone formally said bailout discussions could begin.

European Central Bank President Mario Draghi said at a news conference in Frankfurt, Germany that emergency credit to Greek banks has been raised by 900 million euros ($980 million) over one week. Greek banks have been closed since June 29 after the ECB opted against raising the credit it makes available.

Separately, the eurogroup of finance ministers said it had made the decision to start discussions on a three-year bailout of Greece from Europe's bailout fund, the European Stability Mechanism. The decision comes after the Greek Parliament's overnight passing of austerity measures but is subject to other parliamentary votes required in Europe.


3:00 p.m.

Dutch Prime Minister Mark Rutte's Liberal Party is reserving judgment on the bailout deal intended to save Greece from bankruptcy and a messy exit from the euro single currency.

Rutte conceded after the deal was struck in Brussels Monday that if implemented, any bailout will mean he will have broken an electoral promise to send no more money to Athens.

Mark Harbers of the Liberal Party deflected criticism of the broken pledge by telling lawmakers in a debate Thursday that he can only give an opinion on the deal once all details have been pinned down by eurozone negotiators and Greece.

The Dutch parliament does not have to vote to approve the deal.

Junior Dutch coalition partner the Labor Party welcomed the agreement as a key show of solidarity in a Europe beset by crises at its borders.


2:45 p.m.

The European Central Bank will shortly face questions on when it can help Greece's banks reopen in a news conference, following its decision to keep interest rates unchanged.

ECB President Mario Draghi will chair Thursday's news conference after the bank decided to leave its main interest rate unchanged at a record low of 0.05 per cent.

As well as commenting on the broad economic situation, Draghi will likely be quizzed over when the ECB will increase emergency credit to Greek banks. It capped the amount on offer over two weeks ago, a move that forced Greek banks to close as they were unable to meet demands for withdrawals by fearful depositors.

The ECB says it can only lend to banks that are solvent. So it first needs a clear prospect of a bailout deal for Greece to restore the finances of the government and banks.


2:20 p.m.

The European Union is hailing the austerity package adopted by Greek lawmakers as a significant step toward rebuilding trust and fulfilling preconditions for a new financial bailout of the country.

EU Commission spokeswoman Annika Breidthardt said in Brussels that the Greek parliament "has spoken with a very loud voice." Greek lawmakers backed the package by 229 votes to 64.

Breidthardt said experts from the Commission, International Monetary Fund and European Central Bank have come to a unanimous agreement that the Greeks had "legally implemented the first set of four measures agreed at the euro summit" on Monday.

Greece's 18 eurozone partners agreed to provide it with around 85 billion euros ($93 billion) in financial assistance, but only if the Greek government committed itself in advance to a raft of measures and reforms.


2:10 p.m.

Finland has given its backing to the start of Greek bailout negotiations and for a short-term loan to be sorted out for the financially strapped country.

Finnish Finance Minister Alexander Stubb said a committee of Finnish lawmakers has backed both, hours after the Greek Parliament approved an austerity package demanded by creditors in return for a bailout from Europe's bailout fund, the European Stability Mechanism.

Stubb said in a tweet that the so-called Grand Committee has given the government "a mandate for bridge financing and beginning of ESM-negotiations on Greece."

Finland has taken a hard line over Greece in recent weeks.


12:35 p.m.

Credit ratings agency Moody's says Greece's approval of austerity measures "averts an immediate disorderly default and potential exit from the euro" but warns that "risks remain elevated" given substantial skepticism within the country on the bailout conditions.

The Greek parliament's approval of the economic measures paves the way for eurozone finance ministers to open talks on a third rescue package for the country worth some 85 billion euros over three years.

Moody's notes, however, that "judging by recent events and the deep economic problems and social divisions within society, it is highly uncertain whether the Greek authorities have the capacity to achieve agreed objectives and to abide by its creditor's conditions."


12:25 p.m.

European stock markets are up after the Greek parliament voted through a bill of budget savings needed to start official negotiations on a new bailout.

The Stoxx 50 index of top European companies was up 1.4 per cent in late morning trading. Germany's DAX and France's CAC-40 were up by the same rate. Greece's stock market has been closed since late June, when banks were shut.

The Greek parliament's approval of the economic measures paves the way for eurozone finance ministers to open talks on a third rescue package for the country worth some 85 billion euros over three years.


12:00 p.m.

The head of the eurozone's rescue fund says failure to conclude a bailout deal for Greece would lead to the collapse of the country's major banks, which he says would affect the rest of the eurozone.

Greece wants to tap the European Stability Mechanism. To use the fund, officials must establish the existence of a risk to the financial stability of the entire eurozone, which many question.

ESM chief Klaus Regling told Germany's ARD television Thursday that failure to reach a final agreement would mean the collapse of Greece's banking system.

He said the four biggest Greek banks are "system-relevant," code for significant to the international financial system, and that if they fail that would have "severe effects not just for Greece itself ... but for the eurozone as a whole."


10:15 a.m.

Germany's finance minister says the eurozone must keep to its rules as it negotiates a new bailout with Greece, which Berlin says rules out an outright debt cut for Athens in the eurozone.

Wolfgang Schaeuble told Deutschlandfunk radio Thursday negotiations will determine whether a new package is possible given Greece's increased needs.

He added: "We will open negotiations, we will make every effort, but we must keep to the rules because Europe is based on the principles of democracy and the rule of law"

Schaeuble has taken a hardline approach. Last weekend, a paper from his ministry suggesting the possibility of a voluntary, temporary Greek euro exit emerged. The minister said Thursday "it would perhaps be a better way for Greece, and many say that — increasingly in Greece too."


10:00 a.m.

Germany's finance minister says the Greek Parliament's approval of an austerity package is "an important step" but is warning that talks on a final bailout deal will be tough — and that an outright debt cut would be incompatible with Greece keeping the euro.

Greece's creditors demanded the Greek vote before opening full bailout negotiations. Eurozone finance ministers must approve opening those talks, as must Germany's Parliament in a vote expected Friday.

Finance Minister Wolfgang Schaeuble told Deutschlandfunk radio Thursday that making Greece's debt sustainable will be tough. Germany says a debt cut would be illegal.

Schaeuble said: "No one knows at the moment how it's supposed to work without a debt cut, and everyone knows that a debt cut is incompatible with membership in the currency union."

News from © The Associated Press, 2015
The Associated Press

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