Brussels (Reuters) - Euro zone finance ministers agreed Saturday to spend another 12 billion euros ($17.4 billion) to the Greece the details of a second package helps in Athens, said to be finalized mid-September.
After a conference call, the Ministers agreed that the fifth instalment of rescue EUR 110 billion have agreed with the Greece in May 2010 in the euro area 17 would be paid by July 15, as long as the IMF Board to sign the disbursement. The IMF should meet July 8 to approve it.
The payment will enable the Greece avoid the immediate threat of failure, but the country still needs a second rescue plan, expected to total approximately EUR 110 billion and will now probably only finalized in September.
Between now and then, the Finance Ministers will work on "the specific modalities and a scale" of the involvement of the private sector in the second package of aid, the hopes of the Germany will be eventually total approximately EUR 30 billion.
The Greece said that it expected a final decision on a second programme of rescue mid-September to maintain the country funded.
Eurogroup decided today to work on a new program in time, before mid-September, with a teleconference "Minister of finance Greek Evangelos Venizelos said shortly after the Finance Ministers approved the payment of 12 billion euros."
"What is crucial now is to implement the decisions of the Parliament timely and efficient", he said.
Payment of EUR 12 billion help Athens meet a redemption of bond of 5.9 billion euros in August, but the Government still has a monumental Hill climb if it is back to the sustainability of debt, with its ratio of debt to GDP 150%.
Athens has repeatedly failed to meet budget targets set out in the first rescue package, increasing the risk that the crisis will spread across the euro area, if unresolved.
Second Greece program is to run from 2011 to 2014 and will come from existing aid package. In the package Greece should raise around 30 billion euros of privatization, while that the EU and the IMF will provide approximately 50 billion euros, two split third 1/3.
"The precise terms and the extent of the participation of the private sector and the additional funds from official sources will be determined in the weeks to come to ensure that... need for program funding is in place,"a statement from the reading of the Eurogroup, indicating a time in the second programme as they had planned to finalize the details at a meeting on July 11.""
"Ministers agreed that the main parameters of a multi-year adjustment for the Greece program to focus around a continuing commitment to the implementation of measures of fiscal consolidation... and concrete structural reform and privatization.
Leaders of the EU is committed to the second program at their last Summit on June 23-24, which should satisfy the condition of the IMF that the euro zone must promise to finance the Greece 12 months for the IMF to contribute.
Despite the release of the next payment tranche, which will provide respite for Athens, is mounting among officials of the EU concern that restrictions imposed in the Greece, of which 28 billion euros of austerity measures between now and 2015, are too harsh and could cause damage in the long term.
The Poland Minister, who comes to take the six-month European Union Presidency, has suggested Saturday that too much emphasis had been put on the austerity and too little growth on in Greece.
The market still sees a chance to 81 per cent that Greece will finally be default, however, and German Chancellor Wolfgang Sch?uble said Der Spiegel in an interview that Berlin was the preparations for such an event - even if it does not expect it to happen.
WHAT IS THE EXTENT OF THE PRIVATE SECTOR
Private financial institutions held talks with Finance Ministry and Central Bank representatives in the countries of the euro area last week to discuss under what conditions the private sector would be willing to help finance the Greece and how much.
These discussions are continuing, with the participation of the private sector in the next package a must for many countries of the eurozone as voters grow increasingly more opposed to the burden of bailing the Greece on their own.
But the participation of the private sector must be voluntary to avoid the outbreak of a further downgrade of Greek debt default status by rating agencies, a development that could put the Greek banking sector at risk.
The Institute of International Finance, a global association of financial institutions, said Friday that the "private financial community is ready to engage in a voluntary, cooperative, transparent and comprehensive effort in support of the Greece, held of his unique and exceptional circumstances."
Sch?uble said German banks wanted to ride on a value of 3.2 billion euros from the Greek obligations coming due in 2014.
French banks have reached an agreement on how to ride on a portion of their holdings of Greek debt, said French President Nicolas Sarkozy, but did not indicate the total amount.
Another meeting of Finance Ministers the euro zone, on 11 July will help finalize the second package of funding for the Greece, but officials said they would not surprised if the final decision was taken by the Finance Ministers in September.
(Other reports by Angeliki Koutantou and James Mackenzie in Athens;) (Editing by Sonya Hepinstall)
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