Greece set for extra 'time' under bailout plan

Eurozone and IMF leaders conceded on Friday that Greece needs more "time" to meet agreed targets under its international bailout, but officials maintained no "third aid programme" is required. Eurogroup finance ministers joined by International Monetary Fund managing director Christine Lagarde set a new deadline of late next month for the latest revision of the rescue package, including what Greece called "part-funding decisions." The result being that the next summit of EU leaders on October 18-19 is once more shaping up as a Greek showdown. The news from these informal talks in Cyprus overshadowed an ongoing stalemate over the eurozone's fourth-largest economy, Spain. As inspectors from the IMF, the European Central Bank and the European Commission review Greece's accounts and reform progress to determine whether it merits another installment of bailout loans, Lagarde indicated that the scale of the needed revision is growing fast after six months of slippage. "Clearly timing is an issue worth consideration," she told a news conference before non-euro counterparts joined the two-day gathering. "And together with timing (and) programme implementation, clearly the financing has to be envisaged as well." Greek finance minister Yannis Stournaras told reporters afterwards that negotiators were "converging" and aim "to be ready for part-funding decisions at the latest by the second half of October." Asked if the key lay in giving Greece longer to turn itself around, Stournaras replied: "It's on the table." EU leaders are insisting that Greece must make further public sector cutbacks totalling 11.5 billion euros ($14.5 billion) in 2013 and 2014. They also want to see long-promised state sell-offs actually happen. Since May 2010, Greece has struck deals for 240 billion euros in international loans with almost another 100 billion written off by private investors. However, locked in a fifth year of recession, Greece has yet to deliver on most of its promises. Its most recent target was to get the country's public deficit down to 4.5 percent of gross domestic product by 2014, with the broader goal of bringing the country's debt down to 120 percent of GDP by 2020. But the first of those is likely to be pushed to 2016, and the second could also move, Lagarde saying only it was "premature" to talk of a change here. First, Greece must come up with "robust" reforms that are seen as "game-changers," said Eurogroup head and Luxembourg prime minister Jean-Claude Juncker. Tensions on financial markets have eased this week following the European Central Bank's controversial plan to buy bonds issued by struggling states and Germany's highest court unfreezing a new European firewall due for use in both Greek and Spanish banking rescues. And even hardliners bought into the changing approach on Greece. "If the deficit turns out to be somewhat worse than expected because of a temporary downturn in the economy, there could be some more time -- but not money, not extra money," said Dutch Finance Minister Jan Kees De Jager. Austria's Maria Fekter adopted the same line, saying "we will give them the time they need for that but probably not more money." A diplomat attending the Nicosia talks told AFP that the message ministers were sending out was that there would be no third package of loans to Greece. "Obviously more time means some more cost along the way, but when ministers say no more money, they mean no third aid programme," he said. Turning to Spain, Lagarde rejected any idea that the IMF was already involved in "deep negotiations" with the ECB on a full sovereign bailout. "I can assure you we are not," she told the press conference. Dutch financial daily Het Financieele Dagblad reported that the ECB was in talks with the IMF on a Spanish rescue package worth 300 billion euros ($390 billion), which an ECB spokesman said was "unfounded." Spanish Finance Minister Luis De Guindos announced that Spain will unveil a new national programme of structural reforms on September 27. "We have until the end of the year," a senior diplomat said of the widespread expectation that Spain will seek to upgrade a 100-billion-euro credit line for bank recapitalisation into a full-fledged sovereign aid package.