Greek Finance Minister George Papaconstantinou leaves a press conference at the G-20 Meeting of Finance Ministers and Central Bank at the World Bank headquarters in Washington, Sunday, April 25, 2010.Cliff Owen
Greece's finance minister said what promises to be one of the largest international financial rescues will be in place for his country by early May, a message aimed at skeptical investors who pushed the cost of funding Greek debt to prohibitive levels last week.
Facing a packed room of more than 100 reporters from around the world, George Papaconstantinou said on Sunday that meetings with European counterparts and the International Monetary Fund over the last 24 hours leave him confident that an aid package that will exceed 30-billion euros in the first of three years alone will be completed before Greece must return to the markets to finance its massive budget deficit.
And he had a message for investors betting otherwise: "I can see a number of you have been betting particular ways," Mr. Papaconstantinou said in a calm voice. "All I can say is that you will lose your shirt."
On Friday, Greece triggered an emergency backstop arranged by other European nations and the IMF after the cost of financing its debt rose to extreme heights as investors lost faith that the Greek government, struggling to tame a deficit that is almost 14 per cent of gross domestic product, could manage a debt that is bigger than the country's annual economic output.
Mr. Papaconstantinou had hoped that the promise of funding from his country's partners in the euro and the IMF would be enough to maintain investors' confidence.
But revised European Union data that showed Greece's deficit was wider than previously stated, and a downgrade by credit rating agency Moody's Investors Service, overwhelmed Greek, European and IMF promises that everything would work out. Even after Greece said it would trigger the aid package, the yield on the country's two-year bonds remained higher than 10 per cent, according to Bloomberg News.
The worries about Greece among investors -- and among many of the finance ministers and central bank governors in Washington this weekend for meetings of the IMF and the World Bank -- revolve around uncertainty about the nature of the aid package.
Some European countries, including France and Germany, still must ratify their contributions to the rescue fund in their respective legislatures, raising questions about whether the full 30-billion euros pledged by European leaders for the first year of a three-year plan will actually be delivered.
There also are questions about the conditions that the European Union and the IMF will put on the loan, and whether their program is big enough since no actual euro-amount has been committed for the second and third years of the program. The IMF's potential contribution also remains a mystery, as it's eventual contribution has been described only as one-third of the ultimate package.
European and IMF officials have been in Athens since last week working on the technical details for the rescue and will need more time to complete their work, Mr. Papaconstantinou.
The delay is causing a certain amount of anxiety, as ministers on the outside of the talks worry about the potential for contagion, which would crimp the global recovery.
U.S. Treasury Secretary Timothy Giethner, in a statement after his own meeting with Mr. Papaconstantinou on Saturday urged European countries and the IMF "to move quickly." Finance Minister Jim Flaherty told reporters Saturday that some Group of 20 nations, including some from Europe, fear the aid plan as it stands is "not enough" to guarantee Greece's flirtation with the brink is a "one-time event."
"There is some urgency to it," Mr. Flaherty said of the Greek situation.
Mr. Papaconstantinou got support in his effort to ease concerns from IMF Managing Director Dominique Strauss-Kahn, who said in a statement after a meeting with the Greek finance minister Sunday that he was impressed by the Greek authorities' "determination to take that actions necessary to put their economy back on track."
The IMF chief also acknowledged his institution's role in calming nervous investors and finance ministers.
"Everyone involved in the financing effort recognizes the need for speed," Mr. Struass-Kahn said. "I am confident that we will conclude discussions in time to meet Greece's needs."
Mr. Papaconstantinou, who arrived in Washington in the wee hours on Saturday, said he met twice with Mr. Struass-Kahn, alone on Sunday and with European Union Economic Affairs Commissioner Olli Rehn and European Central Bank President Jean-Claude Trichet on Saturday. Besides Mr. Geithner, Mr. Papaconstantinou said he met his counterparts from Germany, France, Italy, Brazil, Russia and China to rally support for the rescue in Europe and on the IMF's board of directors for the rescue.
"To us, there is no uncertainty," Mr. Papaconstantinou said. "There will be a full agreement with very specific numbers attached."