German finance minister, Wolfgang Schäuble, has unexpectedly said that Greece will need more financial help, admitting for the first time that $328 billion pledged so far won’t be enough to save Greece from bankruptcy.
Schäuble’s surprise admission of this deeply unpopular prospect comes at a sensitive time for his party. Germany will hold a general election on September 22.
“There will have to be another program in Greece,” Mr. Schäuble told an election campaign audience.
The subject of providing further financial assistance to Greece has of late been delicately avoided because the approach to Eurozone debt crisis is now one of the key differences separating chancellor Angela Merkel’s Christian Democrats from the main opposition Social Democrats.
“Schäuble really has now let the cat out of the bag,” the Financial Times (FT) quotes Carsten Schneider, SPD budget spokesman. “He previously left open the question of whether Greece needed another bailout.”
Meanwhile, German voters fear that any further bailouts and debt write-offs would translate into higher taxes and bite deeper into their pockets.
Germany has so far been the biggest contributor to the rescue aid packages for Greece.
Just hours before Mr Schaeuble spoke, his boss Angela Merkel was quoted in the media dismissing questions about further aid for Greece, saying there was no point in discussing the matter until its second package expires at the end of next year, the Telegraph reports. However, Schäuble is unanimous with many who believe Greece will have to be given new funding.
Greek finance ministry officials say that any further help for Greece would be much smaller than the previous aid and will aim to cover its funding shortfall in 2014-2016, according to Reuters.
The International Monetary Fund has put Greece’s uncovered funding needs for 2014-2015 at 10.9 billion euros. However, such estimates are revised frequently and are highly sensitive to budget and economic growth projections, the agency reports.
The ‘Troika’ of Greece’s international lenders – the EU, ECB, and IMF will return to Athens this autumn to reexamine the country’s progress in tackling its debt and whether the government needs to find further savings to meet its 2015-2016 budget targets.
The former Greek MP, Eva Kaili, in an exclusive interview to RT criticized the Troika lenders for ‘experimenting in Greece’ and hopes the same mistakes aren’t repeated in other struggling economies.
Kaili believes Germany, along with the Troika of lenders, left Greece no choice in their recovery plan.
“They just tried to soak our country with these measures, without planning anything, without trying to implement the changes,” Kaili told RT. She added, “Germany is the only one that makes decisions and this power game should be reset.”
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