The European Union has not delayed the payment of a third aid tranche to Athens, a senior official said today, contradicting Austria's finance minister who said the EU had postponed payment to check on Greece's fiscal progress.
Euro zone finance ministers told Athens yesterday to cut spending further to meet budget deficit reduction targets agreed as part of its bailout programme, and EU/IMF officials are in Greece to inspect the country's progress under its €110 billion bailout plan.
Greek finance minister George Papaconstantinou, who unveils the country's final budget draft for 2011 tomorrow, said he was ready for additional spending cuts to meet the targets.
Under terms of the assistance plan agreed in May, the debt-laden country was set to obtain its third aid tranche of a total €9 billion around the end of the year.
"A decision on the third instalment for Greece should be taken in December by the 14 participating euro area member states that participate in the loan scheme. But the disbursement has always been seen for January next year," EU economic and monetary affairs commissioner Olli Rehn told a news conference.
"The decision in December, the disbursement in January, so there is no delay," he said.
Earlier, Austria's finance minister Josef Proell had said the EU was postponing the payment to January to wait for a final estimate of Greece's fiscal numbers.
"The Greek tranche will be postponed until January and not be paid out in December. We are waiting for the numbers out of Greece...," Mr Proell said.
He later said he had not meant to threaten blocking the payments.
"If they can present us -- and I'm very hopeful about this -- with an answer about the new figures then there is no problem. I never said I planned to block support for Greece."
The Greek government said it expected the IMF part of the aid tranche, totalling €2.5 billion, to be paid out in December.
The EU revised upwards Greece's budget deficit for 2009 on Monday, raising doubts over its ability to cut its shortfall to about 8 per cent of GDP, as agreed, this year.
Before the European Commission's denial, Greece's 10-year yield spread over Bunds widened by four basis points to 921 basis points and its CDS stretched 19 basis points wider to 950.
The Greek finance ministry said the EU payments could not be made before the end of the year because they required more than 10 working days from a December 7th meeting of EU finance ministers.
"This ... has been agreed a long time ago with the European Commission and creates no cash problem at all for our country," the ministry said.
Mr Proell, who must push an unpopular cost-cutting budget through the Austrian parliament by the end of the year, said on Tuesday that Greece had not fully met its fiscal targets and that Austria's €190 million euro contribution could not be taken for granted.
Austria's resurgent far-right party has called for a complete stop to Greek aid.
Reuters