Tuesday, October 8, 2013

Greece may need a third aid package as soon as next year, Klaus Regling, the head of the European Stability Mechanism (ESM) permanent bailout fund is quoted as saying in the Friday edition of the German business daily Handelsblatt. He also said that it was conceivable that Greece might not be in a condition to raise money by selling sovereign debt on the open market in 2014.
"Given these circumstances, Greece will probably need another aid package," Regling said, which would require the approval of the finance ministers of the 17 euro-zone countries.
Regling is not the first to publicly voice expectations that there will be a third bailout package for Greece. In August, German Finance Minister Wolfgang Schäuble expressed a similar belief although he explicitly noted that it would have to come without fresh payments from other euro-zone countries.
In the interview, Regling also criticized as "irresponsible and unfounded" the fact that "some in Northern Europe are stoking fears against the euro." The costs and risks associated with the euro bailout need to be assessed in a reasonable manner "in Germany too," he added.
So far, Greece has received two large bailouts. The first aid package included €110 billion ($150 billion) and was first agreed upon by the euro-zone member states and the IMF in 2010 (see table). Back then, the permanent euro bailout fund had not yet been established, so €80 billion of the loans provided at the time came from the individual euro-zone countries. But only €53 billion of these loans were actually paid out to Greece.

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