FRANKFURT, Germany — Greece could get another $28 billion in aid from its fellow euro countries and raise three times that through new austerity measures such as selling government property, a top European Central Bank official says.

Lorenzo Bini Smaghi, a member of the central bank’s executive board, was quoted by the Financial Times as saying that Greece needs between $85.6 billion and $100 billion through next year.

That gap could be filled in several ways, Bini Smaghi said, giving a rough sketch of a plan for additional assistance that was split between government and private-sector contributions.

The private-sector money would come partly from selling government property as well as rolled-over investments from Greek banks and issuance of short-term government debt.

The government half would be split – two-thirds from the euro area countries, or about $28 billion – and the rest from the International Monetary Fund.

Bini Smaghi said the plan “has to be studied further” and would, in any case, require a concrete commitment from the Greek government to keep working to fix its finances. Greek political parties, however, failed last week to agree to a new plan of austerity measures.

Advertisement

In an interview published on the Financial Times’ website Sunday, Bini Smaghi again rejected any reduction of the debt through restructuring – that is, Greece’s delaying repayment or paying less than the full amount owed. He said that would mean a “major, economic, social and even humanitarian disaster.”

Bini Smaghi did say that Greek banks might renew some of ther holdings, presumably voluntarily.

Earlier in the financial crisis, European officials successfully pressed banks to voluntarily maintain their exposures to troubled countries in Eastern Europe.

Greece already got a rescue package last year worth $157 billion from the eurozone and the IMF. But its economy continues to deteriorate and the government says it won’t be able to tap financial markets as planned next year.

EU officials are under pressure to secure Greece’s financing for at least a year ahead, with Luxembourg’s prime minister, Jean-Claude Juncker, saying last week that otherwise, the IMF’s rules would not permit it to pay out the next installment of its loans to Greece in June.

“If the Greek government agrees to the program, the IMF will disburse and I am convinced that the euro area countries will disburse their part,” Bini Smaghi said.

Advertisement

EU officials are waiting for a joint report on Greece’s progress by EU, IMF and European Central Bank experts. If the troika report is not satisfactory, and if there are no further measures from Athens, some EU states may stop the aid, said the spokesman for Olli Rehn, European monetary affairs commissioner.

Amadeu Altafaj Tardio said that hopefully in the coming days, the Greek authorities will back up their words with actions and that won’t be necessary, he said.

“These are the rules of the game,” Altafaj Tardio said. “These are the conditionalities of this assistance.”

On Monday, the central bank said that for the ninth straight week, it left dormant its program to buy bonds of struggling countries.

The bank has halted the purchases, which helped hold down interest rate yields on the countries’ bonds, after trying without success to get the European Union’s bailout fund to take them over.

 


Only subscribers are eligible to post comments. Please subscribe or login first for digital access. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.