EU ministers urge Greece to reach debt agreement

Finance ministers from across the eurozone who have been meeting for talks in Brussels have called for Greece and its private sector debtors to reach an agreement in the coming few days. Although ministers have said that 130 billion euros have been made available to the country, they added that the funds would not be handed over until assurances were given over the economy and structural reforms.

The group went on to say that it expected private sector creditors to agree to a nominal 50 per cent reduction in the value of loans made to the country. An agreement on the parameters of an adjustment programme is also expected between the IMF, European Central Bank, European Commission and the Greek government.

European Financial Stability Facility chief executive, Klaus Regling, said that he did not expect there to be much of a knock-on effect by Standard & Poor’s recent decision to downgrade the financial assistance fund. He pointed out that S&P’s decision referred to its credit rating over the longer-term and would have little impact on the fund’s ability to act over the short-term.

The EFSF has maintained its top flight credit rating with the two other most prominent agencies, Moody’s and Fitch. Mr Regling went on to say that there had been no reduction in the fund’s capacity of 440 billion euros and that it was currently capable of supporting countries in the eurozone.

IMF chief Christine Lagarde said separately that the economies of the world were in danger of slipping into a 1930s-style financial crisis if more was not done to sort out the problems being faced in the eurozone.