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Greek recovery is undermined by too high interest rates

Date

08 Apr 2010

Speaking in the special plenary debate of the European Parliament today with the President of the European Council on the outcome of the recent EU summit, Guy Verhofstadt poured doubts on the effectiveness of the special financial mechanism agreed on 26th March aimed to mollify market speculation and bolster Greece's ability to pay off its public debts.

"Although the Greek Treasury successfully raised €5 billion in bonds last week, the markets and credit rating agencies remain unimpressed and the long-term prospects for a happy ending to the Greek tragedy are uncertain."

"This uncertainty is compounded by the caveats placed on the EU bilateral loans which can only be released if 'market financing measures are insufficient' and if all EU Member States agree. Greece should have been offered a single loan from the European Commission at preferential interest rates."

"In addition to the tough austerity measures being taken by the Greek Government, the solution to the Greek debt problem lies not in some superficial solidarity that may or may not be implemented but in favourable interest rates which will allow Greece to repay its debts at an affordable cost. Instead Greece is currently having to repay at twice the rate set by the German Treasury and 3% or 4% more than the reference rate on the market. If the EU is genuinely to show solidarity it should extend to Greece the credibility and liquidity enjoyed by the wider eurozone."

"The Commission, not the Council, is the true guardian of the Community interest. It should come forward with an ambitious package of economic reforms, similar in scale and importance to the Delors proposals of the1980s that launched EMU." 

"As for the 2020 strategy, the open method of coordination must be abandoned in favour of more persuasive sticks and carrots. If Council does not budge on this, Parliament should use all its political leverage, including withholding support for the economic policy guidelines."

For more information, please contact:

Neil Corlett: +32-2-284 20 77 or +32-478-78 22 84

e-mail: neil.corlett@europarl.europa.eu 

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