facebook
twitter
rss
account
search
search
 

EU leaders delay debt summit amid deadlock

July 14, 2011 at 3:00 AM   |   Comments

BRUSSELS, July 14 (UPI) -- European leaders put off a eurozone debt-crisis summit, officials said, amid a Greece bailout deadlock, a stern IMF warning and new global-fallout fears.

The summit, bringing 17 government leaders together to look for a way to stop the eurozone sovereign-debt crisis from spiraling out of control, was put off until next week after German Chancellor Angela Merkel said Friday's original date was too soon to come up with a comprehensive package to restore eurozone stability, an official said.

Eurozone finance ministers may hold a crisis meeting Friday anyway, even if the government leaders wait, senior eurozone officials said.

A default by Italy is increasingly feared by officials. The country, whose debt is 120 percent of its annual gross domestic product, was to hold four bond auctions Thursday, seeking to raise more than $7 billion.

Finance ministers said auction success was essential so Italy, the European Union's third-largest economy, can show it's not in danger of losing access to market funding.

These actions and an unraveling uncertainty followed the eurozone's failure Monday to come up with a comprehensive second bailout deal for Greece, worth $120 billion.

The countries remained split Thursday over the role private investors, or creditors, would play in the bailout and whether bringing them in would amount to a selective default, officials said.

A default could lead to a domino effect, The Wall Street Journal reported.

Moody's Investors Service downgraded Ireland's credit to junk status, a move European Commission spokeswoman Pia Ahrenkilde Hansen called "incomprehensible."

Fitch Ratings downgraded Greece's credit further into junk territory, which Athens called "bewildering."

Fitch kept Italy's rating at AA-minus "in the absence of negative shocks [and] adherence to the fiscal targets set out by the government."

Also Wednesday, the International Monetary Fund told Greece it had no choice but to be unfaltering in carrying out its draconian fiscal reforms and privatization, which brought riots and protests in Athens and strikes across the country late last month.

"There is no room for slippage. There is no room for underperformance," IMF Greek Mission Chief Poul Thomsen told reporters in a conference call.

Key parts of Greece's program are already behind schedule, he said, as the IMF and other European countries pressured Prime Minister George Papandreou to speed up Athens's sell-off of government assets and money-losing companies, while recommitting to its aggressive reform program, The Washington Post reported.

Papandreou said Greece -- whose gross domestic product is forecast to shrink 3.8 percent this year, down from an earlier-forecast 3 percent contraction -- would consider offering public property as government collateral to get loans if it's allowed to seek them after the next bailout package, Britain's The Guardian reported.

The IMF, based in Washington, said it was also concerned Greece's reform plan had only "shallow" political support.

"It is imperative for the government to develop broader support for these key reforms," the IMF said in a report.

Even with full-fledged support, Greece's public debt will be 172 percent of the gross domestic product next year and still be at 130 percent in 2020, the IMF said.

© 2011 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
Most Popular
1
Tesla could face sales ban in Michigan Tesla could face sales ban in Michigan
2
Early completion of refit of Italian aircraft carrier Early completion of refit of Italian aircraft carrier
3
British Reaper UAVs join the fight against Islamic State British Reaper UAVs join the fight against Islamic State
4
Iran stands by Pakistani gas pipeline Iran stands by Pakistani gas pipeline
5
Saudis probe oil pipeline blaze Saudis probe oil pipeline blaze
Trending News
Around the Web
x
Feedback