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Eurozone could step in to bail out Greece again

Nikhil Kumar
Sunday 08 May 2011 19:00 EDT
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Greece may need to be bailed out by its eurozone peers for a second time amid concerns the country might not be able to access the capital markets meet its refinacing obligations.

The worries surfaced this weekend after the euro fell by nearly 1 per cent and the cost of insuring against Greece defaulting on its debts rose to a record high on Friday in the wake of a report that the country was considering pulling out of the eurozone. The Prime Minister, George Papandreou, denied the suggestion, saying: "No such scenario has been discussed."

Yesterday, the Chancellor George Osborne suggested that Greece might need further assistance, although he denied that it would necessarily be forced to resort to defaulting on its debts. "I think it is inevitable that we are going to look at the Greek package and see what they can do to get through the next year, but that might involve additional assistance from, for example, the eurozone," he told the BBC, admitting that the markets were sceptical about the country's refinancing abilities.

He went on to say that Britain would not want to be involved in another rescue. "We certainly don't want to be part of... a second bailout of Greece," Mr Osborne said. His comments came after finance ministers from Germany, France, Italy and Spain gathered in Luxembourg on Friday to discuss the Greek debt crisis.

The meeting was also attended by the Greek finance minister, George Papaconstantinou, the president of the European Central Bank, Jean-Claude Trichet, and Olli Rehn, the European commissioner for economic and monetary affairs.

Jean-Claude Juncker, the head of the group of eurozone finance ministers, said Greece's exit from the single currency was not discussed, calling it a "stupid idea."

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