The European Union has asked Greece to produce detailed plans for its budget deficit reduction targets for the period 2010-2012. This should be done this week, in order for the European Commission and the ECB to provide an assessment to eurozone Member States, which must approve unilaterally the release of credit funds for Greece.
8.5 billion of Greek debt payments come due on 19 May. Now the question is whether the Greek government can produce a plan that is acceptable for the German Bundestag on time. Greek financial minister George Papaconstantinou has hinted on the opportunity of bridge loans if the procedure for release of financing is too slow. But many analysts think that debt restructuring (a polite form of bankruptcy) may be necessary.
Meanwhile the prominent American economist and Harvard Professor Kenneth Rogoff says that at least one more country in the eurozone will need help from the IMF over the next two to three years. Other problematic cases include Ireland, Spain and Portugal. Mr. Rogoff said that:
“A lot of countries have to consolidate their budgets and some may have to turn to the IMF for someone to blame”.
Wolfgang Münchau says that this is going to be “the most important week” in the 11-year history of Europe’s monetary union.