Greece will receive loans in time to avoid default: minister

Reports that European leaders are considering bolder moves to relieve Greece and other countries of their debt burden have buoyed spirits in financial markets, though officials in Chancellor Angela Merkel's government have downplayed such speculation.

The current plan is to have Greece implement painful debt-reduction measures in exchange for rescue loans.

Greece's international creditors are holding up payment of the next batch of those loans until a review of the reforms is completed in the coming days. Without the money, Greece faces bankruptcy in mid-October, potentially sending shock waves through the financial sector in Europe and abroad.

“I am very confident in ... the disbursement of the sixth tranche,” Finance Minister Evangelos Venizelos said, speaking above the sound of chanting from protesting tax office workers outside the ministry, who blew whistles and set off a fake siren. “But we must do what has been agreed.”

The minister said the country had already made great efforts to achieve its fiscal targets, but that a “hyper-effort” was necessary to fully meet its commitments.

Some experts, however, say the current course of austerity is untenable and that Greece will need bigger debt relief. Analysts say that could be achieved by imposing tougher losses on private bondholders, boosting capital in European banks that would take such losses, and increasing the size of the rescue fund.

Greece had originally expected debt inspectors from the International Monetary Fund, the European Central Bank and the European Commission to complete a review of its finances in September and approve the sixth installment of loans from its 110-billion-euro (US$149 billion) bailout.

But the inspectors, known collectively as the troika, suspended their review earlier this month amid talk of missed targets.

Venizelos said the troika would return to Athens this week, and that the next bailout installment, worth 8 billion euros (US$10.8 billion), would be paid out in time.

In Berlin, Greek Premier George Papandreou told a conference of the Federation of German Industries that “we are borrowing to repay” — but also stressed that Europe needs to show it can get its act together.

“I can guarantee that Greece will live up to all its commitments,” Papandreou said ahead of an evening meeting with Chancellor Angela Merkel. He promised that Greeks will “fight our way back to growth and prosperity.”

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