Fekter: “Greek bailout package will not entail any additional costs for Austria”
Solidarity-based agreement significantly better for Austria
Press Release, 22 February 2012
Following marathon negotiations by EU Finance Ministers on the second Greek bailout package totalling EUR 130 billion, Austrian Finance Minister Dr. Maria Fekter does not see the package as placing any additional financial burden on Austria. “To the contrary: This agreement is significantly better for Austria! The ECB will disburse the profits it receives from restructuring the Greek bonds to the EU state banks. For Austria, this will mean significant volume, in the hundreds of millions.”
On the other side of the equation, Austria will only have to accept minor interest losses due to rate reductions on bilateral loans in connection with the first, ongoing bailout package, Dr. Fekter stated further following Tuesday’s meeting of EU finance ministers in Brussels.
Austrian Finance Minister Dr. Fekter particularly advocated the position that Austria, with the triple-A countries, should not be forced to absorb the entire interest-rate losses from the low interest rates given to Greece. “It was important to me to achieve agreement on a solidarity basis. With the agreement we made with the ECB, we managed to do this. We ultimately have to look at everything that is going on with Greece through the prism of our own budget consolidation efforts, after all”, Dr. Fekter stated.
Based on the solution the parties have now found, the Austrian state bank will be able to place the dividends “on a significantly firmer footing”, Dr. Fekter said. Finance Minister Fekter responded to questions regarding the second Greek bailout package by saying that she saw it as less of a “good deal for Austria but rather a necessary stabilisation measure”.
Negotiations on the second bailout package have been ongoing since October. The central element is the voluntary bond swap, entailing a 53.5% haircut for private investors on the face value of their Greek government bonds, and according to negotiators this will mean writedowns for banks, insurance companies and mutual funds of up to three-quarters of their original investments.
This second bailout package is a continuation of the first EUR 110 billion bailout package from spring 2010, and provides for loans and other aid totalling EUR 130 billion between now and 2014. The goal is to reduce the mountain of debt under which Greece is labouring from current levels of more than 160% of GDP to 120.5% by 2020.
Greece is now required to implement its austerity conditions by 29 February. In respect of the timeline for action, Dr. Fekter stated that the EU finance ministers will be reviewing the Greek action plan at a special conference of the Euro Group on 2 March (in tandem with or following the EU summit of presidents and prime ministers).
„Through tough but constructive negotiations, we managed to find a good solution for Greece”, Austrian Finance Minister Dr. Fekter was pleased to report on the agreement reached. “In this way, the Greeks have secured additional funding and – in particular – more time in order ensure that they remain solvent, enabling them to get onto a track that will ensure their survival”, Finance Minister Dr. Fekter stated in closing.