European officials are giving Greece more time to repay its $110-billion loan, even as worries grow that there might not be enough money available to rescue other financially troubled countries. The European Union insists the nearly one-trillion-dollar bailout fund it established with the International Monetary Fund is more than adequate, but conceded that earlier stress tests to determine how well Europe’s biggest banks could handle the crisis were not tough enough. Meanwhile, the head of the IMF expressed confidence that the worst is over, but urged European leaders to find new solutions.
Even as European officials sought to calm financial markets, protesters in Ireland were busy denouncing higher taxes in the government’s tough new budget.
In Greece, pensioners complain austerity measures have driven many of them into poverty.
Many Europeans worry that other high debt countries could be next.
Yet, the EU’s top monetary official, Ollie Rehn, remains confident. He says Europe has the necessary tools to deal with future crises – so long as high debt nations move forward with their own austerity measures.
“The recovery is taking hold and it is progressing, but at the same time it is essential that we contain the financial bush fires so that they will not turn into a Europe-wide forest fire,” said Rehn.
The EU says no additional funds are needed, but it will require a new round of stress tests to make sure European banks are sound. For its part, the International Monetary Fund wants European leaders to implement bold new measures. IMF chief Dominique Strauss-Kahn.
“Europe has to provide, the euro zone has to provide, a comprehensive solution to this problem,” said Strauss-Kahn. “The piecemeal approach, one country after the other one, is not a good one.”
Strauss-Kahn met with Greek Prime Minister George Papandreou on Tuesday to discuss an extension of Greece’s repayment deadline. He said the situation in Europe remains serious, but he was confident about Greece and the future of the 16-nation euro zone.
“There is still a lot to do,” he said. “And what is in front may be even more important than what has been done.”
European bond markets remained tense on Tuesday after EU leaders resisted calls to increase the size of Europe’s bailout mechanism.
Investors are worried the fund would be inadequate to rescue larger European economies such as Spain. voa