EU denies delay in Greek loan as tensions simmer

[November 17, 2010]  BRUSSELS (AP) -- The European Union on Wednesday denied claims that Greece's next bailout loan installment would be delayed, underscoring the extent to which tensions are brewing over paying for the country's rescue.

EU and Greek officials quickly rejected a claim by Austria's finance minister that the next part of the euro110 billion emergency loan to Athens would be delayed from December to January because they were still waiting for data about Greece's progress on cutting the budget deficit.

The EU and Greece stressed there had been no change to the payment schedule for the rescue loan, which is being doled out in portions, depending on Athens's progress in cutting is massive budget deficit.

"It has always been the case that the actual decision to release the third tranche (of the loan) should be taken in December and that the release will be in January," said the office of the EU's monetary affairs chief Olli Rehn.

The ultimate decision on the payment will depend on the outcome of a mission from the EU, the International Monetary Fund and the European Central Bank that is currently in Greece, assessing whether Athens is fulfilling the requirement of its loan agreement, Rehn's office said.

This procedure "has been agreed with the European Commission from the beginning and poses no cash problem," the Greek finance ministry said in a statement.

Austrian Finance Minister Josef Proell had said Tuesday that his country hadn't yet released its contribution to the next tranche of the euro110 billion emergency loan because the country hadn't fulfilled the requirements of the bailout agreement.

He said that if Athens missed the budgetary targets "we need to have a discussion" and insisted Austria could wait with its installment until the figures fit.

The EU statistics agency on Monday said Greece's 2009 budget deficit was much higher than previously expected. To receive the next portion of the loan, Athens has to cut its deficit by a certain amount every year.

Greek Finance Minister George Papaconstantinou on Tuesday defended his country's performance. "Greece during 2010 performed the largest consolidation effort ever seen in the eurozone," he said. "We will fully respect our 2011 targets and intend to take all necessary measures."

In a largely supportive statement, the eurozone nations, the European Commission and the European Central Bank on Tuesday welcomed Greece budgetary efforts and its action to clean up its faulty accounting system, which also lay at the heart of its financial problems.

[Associated Press]

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