PRODUCT PROFILE

Latest Dublin Prices

Greek bailout extension to cost E15bn

Tuesday, September 25 15:29:45

Greece would need E13-15 billion more in funding if it were given a two-year extension to its bailout plan, its finance minister said today, the first time Athens has put a price tag on its plea for more time to get its finances in order.

The recession-battered country may also ask the European Central Bank to help it meet its goals by rolling over Greek bonds it holds rather than cashing them in.

The new conservative-led government has drawn a cold public response from northern European countries for its request for more time to push through austerity cuts so that its economy has some room to recover.

Athens has won the backing of France's government on the issue, but others are wary of an ever-rising bill to save twice-bailed out Greece. Many privately acknowledge such an extension may be unavoidable, however,

"We estimate the funding gap that would be created if we get the two-year extension at 13-15 billion euros," Finance Minister Yannis Stournaras told Reuters at his office in central Athens, adding that the gap could be bridged without seeking more aid.

Greek officials have previously said such a gap could be covered through issuing short-term debt or seeking lower interest rates - avoiding forcing euro zone governments to stump up more money for Greece.

Athens could also ask the ECB to roll over its Greek bonds to help Athens plug any financing gaps from a budget shortfall or lower than expected privatisation revenue, Deputy Finance Minister Christos Staikouras said in a Sept. 19 document released on Tuesday.

Nevertheless, there is growing speculation that even without any extension Greece, which has been in recession for five years, will need more funding to get its debt down to below the targeted 120 percent of gross domestic product by 2020.

Paralyzed by repeat elections and delays in implementing reforms, Greece is way off track in meeting targets under its bailout and will likely require a second debt restructuring, EU officials told Reuters in July.

Some officials estimated the country could need an additional 20-40 billion euros to get back on track - a figure also mentioned by German newspapers in recent days as among the preliminary findings of an ongoing review by lenders.

An EU official acknowledged on Tuesday that Greece was off-track, but said the size of the gap was yet to be determined.

"Some say 14 billion, some say 20 billion, some say 30 billion," the official said.

"The fact is, we won't know the precise figure until the troika report is finished. Until then, it is speculation." (C ) Reuters