Greek bailout decision postponed

@CNNMoneyInvest February 15, 2012: 3:53 PM ET
juncker, venizelos

Eurogroup president Jean-Claude Juncker and Greek finance minister Finance Minister Evangelos Venizelos at a meeting earlier this month. Officials expect to make a decision on a second bailout for Greece next week.

NEW YORK (CNNMoney) -- European finance ministers expect to make a decision on a second bailout for Greece early next week, a top eurozone official said Wednesday.

Jean-Claude Juncker, who heads the Eurogroup of finance ministers from the 17-member eurozone, said "substantial further progress" has been made on key aspects of a second bailout program.

In a statement issued after a conference call with the finance ministers, Juncker said he's "confident" the Eurogroup "will be able to take all the necessary decisions" when they meet on Feb. 20.

At issue is a second €130 billion bailout for Greece, which the nation needs to avoid a messy default on a bond payment due next month.

The Greek government has been negotiating the terms of the bailout with officials from the European Union, International Monetary Fund and European Central Bank, known as the troika.

Juncker said he has received the additional assurances the ministers demanded from Greek political leaders last week. The leaders from the nation's two main parties have pledged to implement recently approved austerity reforms after elections are held later this year.

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Greece and the troika have also identified an additional €325 million in spending cuts that are expected to help the nation meet it's deficit targets, said Juncker.

In addition, Juncker said a key analysis of the sustainability of Greece's public debt has been completed by the troika and presented to the Eurogroup.

The statement suggests that Greece has met the conditions set out by the Eurogroup last week, when the ministers delayed a decision on the bailout and issued more demands.

But it also hinted that the ministers are seeking additional measures to ensure that Greece will use its bailout money to pay off debt before funding any of its other activities.

"Further considerations are necessary... to ensure that priority is given to debt servicing," said Juncker.

EU officials have said they may funnel the bailout money into an escrow account to exert more control over how the funds are used.

Greece, the nation at the center of Europe's debt crisis, has been under intense political pressure from other EU governments to cut spending and revive its ailing economy.

The nation has struggled to meet the conditions of its 2010 bailout as the Greek economy has sunk deeper into recession.

On Monday, the Greek Parliament approved a deeply unpopular package of pay cuts, layoffs pension reforms and other measures to reduce spending.

Euro economy shrinks, is recession next?

The austerity program, which is a condition for Greece to receive more aid, sparked protests and violent demonstrations across the nation earlier this week.

The Greek economy has been mired in a recession with the government reporting Tuesday that Greece's gross domestic product, the broadest measure of economic growth, fell 7% in the fourth quarter, compared with a 5% decrease in the third quarter.

Greece is also widely expected to announce a deal soon with private sector investors to write down a portion of its debts. The deal would result in holders of Greek government bonds voluntarily accepting a loss of up to 70%.  To top of page

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