European Union finance ministers, meeting in Brussels on Monday, grudgingly appeared ready to provide additional aid to Greece to avoid a default, while approving a fresh bailout for Portugal.
Despite receiving a 110-billion-euro ($155 billion) EU-IMF bailout last year, finance experts have said that Greece needs more help. Spanish Finance Minister Elena Salgado confirmed that an extension of loan repayments for Greece was "on the cards."
Earlier on Monday, the European Commission said, however, that a debt restructuring was not "on the cards," warning that such a move could have "devastating consequences."
German Finance Minister Wolfgang Schäuble said on Sunday that Greece could be granted an extension to its repayment schedule for its massive debt, but only if private creditors were also involved.
Dutch Finance Minister Jan Kees de Jager criticized Greece for not being on the "right track" and suggested that rather than a debt restructuring, "the only way forward [was] more reforms, more budget cuts and privatization."Dutch Finance Minister Jan Kees de Jager criticized Greece for not being on the "right track" and suggested that rather than a debt restructuring, "the only way forward [was] more reforms, more budget cuts and privatization."
European Economic Affairs Commissioner, Olli Rehn, told the German daily Die Welt that Greece "must accelerate its economic reforms and set up a complete privatization program," adding that a default would be a disaster for Greece and the entire eurozone.
Giving Athens more funds - Greek government officials have floated the figure of an extra 60 billion euros - is likely to prove a hard sell for EU governments facing voters increasingly hostile to bailouts at the taxpayer's expense.
Portugal gets a bailout deal
Meanwhile, EU finance ministers waved through an emergency loan package for Portugal totaling some 78 billion euros over three years.
The decision is the third bailout granted to a eurozone country in the past year, following Greece and Ireland.
The EU said in a statement that Portugal would "encourage investors to maintain their overall exposures on a voluntary basis." Lisbon is also expected to embark on an ambitious privatization program to reduce public debt.
Both the request to private investors and the privatization measures were conditions set by Finland for their support of the bailout, which must be approved unanimously by all 17 eurozone members.
New ECB head named
EU finance ministers also endorsed Italian central bank chief Mario Draghi as the next president of the European Central Bank (ECB). Sixty-three-year-old Draghi ended up being the only candidate for the presidency, which will become vacant in the autumn, when current president, Jean-Claude Trichet, retires.
Germany's Angela Merkel had initially hoped to win over former Bundesbank chief Axel Weber for the top job at the ECB. After Weber declined, Merkel followed French President Nicolas Sarkozy and spoke out in favor of Draghi. His nomination is expected to be formally agreed at the EU summit at the end of June.
Authors: Gregg Benzow, Nicole Goebel (dpa, AFP,Reuters)
Editor: Nancy Isenson