Finance ministers from the euro area gathered today in Luxembourg at the very busy agenda: to help rescue Spain and Greece and Cyprus – another victim of the debt crisis AFP. The meeting will start tonight and is expected to continue until late at night. It will be the first of a series of meetings devoted to the crisis, announced Monday.
Support for Madrid
Madrid is expected to formally request assistance for their banks and the exact amount and details of its grant are expected with a lot of attention from the markets. The Spanish government did not want to make the request before you become aware of the results of audit of banks, expected today to be clear exactly how much money will be needed for the financial sector. Eurogroup provides assistance to 100 billion euros, a record amount for the euro area.
Renegotiation of the plan for Greece
Greece will also be the subject of discussions. The compilation of the conservative government headed by Antonis Samaras opened the way for an early return to Athens creditors troika (EU, ECB and IMF). Greece will strive to insure that a review of the austerity plan in exchange for international aid. Brussels has already made it clear that any possible extension to achieve budget balance, but expects Athens to fulfill its commitments.
“If the Greeks do not want to raise taxes may be cutting military spending,” a diplomat proposed yesterday by one of the eurozone countries that are least likely to alleviate the conditions of Athens. President of the Greek National Bank Vasilis Rapanos, who is expected to become finance minister in the new Greek government is expected to represent their country at a meeting in Luxembourg.
Cyprus is next in line
The fate of Cyprus, which is to take over the rotating EU presidency for six months, also included in the agenda of the meeting of the Eurogroup. Nicosia plans to request assistance from their banks for the euro area “probably next week,” said a European diplomat. Cyprus hopes that, like Spain, will not be imposed austerity measures in return for such aid.
The country is expected to request a loan from Russia and between 3 and 5 billion euros. Russian Deputy Finance Minister Sergei Storchak, quoted by ITAR-TASS, today told reporters that so far no formal request from the Cypriot negotiators said Evroobzarvar information portal.
The situation in Greece is closely connected with the problems of Cyprus, ITAR-TASS notes. Cypriot banks traditionally hold large stakes Greek bonds, which today can hardly be called valuable. By 30 June Nicosia must recapitalize the most affected by the deletion of the Greek Cypriot government bonds National Bank, which requires 1.8 billion euros.
More a bout 5 billion will need the country to repay the debt in recent year and a half – three years. The situation is complicated because Cyprus lost a real opportunity to obtain the necessary funds from financial markets as two of the three major international rating agencies consider it a uncreditworthy.
Italy also hopes to receive money
In Italy, the current situation is less tense. No longer a question of providing assistance to crisis-country, and the use of indirect instruments to maintain financial stability. Prime Minister Mario Monti require purchase of bonds of eurozone countries from the European stabilization fund, but it was cool, met in Brussels.
The meeting of the Eurogroup, which can last until late at night is the first of a series of meetings dealing with the crisis: tomorrow in Rome will have mini-summit of leaders of Italy, Germany, France and Spain, on 28 and 29 June Brussels will gather European State and Government recalled Monday.