Merkel: Greek approval "important," not just about austerity

Feb 13, 2012, 16:05 GMT

Berlin - German Chancellor Angela Merkel said Monday that the approval by the Greek parliament of austerity measures was a 'very important' step, but stressed that it was now time to push through reform programmes that go beyond spending cuts.

'This is not just about saving, it is also about structural reform and, on top of this, the European Union will help the institutions to be better set up,' Merkel told journalists in Berlin.

'It is important for us that Greece has a chance to return to the markets in the year 2020 with a debt sustainability of 120 per cent,' the chancellor added.

This debt ratio - down from the current 160 per cent of gross domestic product - is a condition set by the International Monetary Fund and Greece's European partners to be eligible for a second bailout package.

On Friday, Finance Minister Wolfgang Schaeuble had told his and Merkel's parliamentary group that the measures taken by Greece so far would only bring the country's debt down to 128 per cent of GDP by 2020.

Asked whether the measures imposed on Athens were too harsh, Merkel insisted, 'There cannot and will not be a change to this programme.'

EU leaders were also looking at means to stimulate growth, the chancellor added.

'Nevertheless, something needs to be done for improved competitiveness, which is why it is now about finalizing this programme,' Merkel insisted.

Schaeuble said Greece was simply 'too expensive' compared to its competitors, insisting the measures were not about 'torturing anybody.'

The comments came after Greek lawmakers approved a new round of austerity measures to appease creditors late Sunday, amid violent popular protest on the streets of Athens.

Asked whether Greece could be eligible for a form of Marshall Plan, which helped rebuild European economies after World War II, Merkel said there were already European structural funds available - especially for smaller companies seeking capital.

'We are doing everything so that money is available for growth, but this money has to arrive in the right place and be spent in the right way,' the chancellor warned.

Eurozone finance ministers are due to meet on Wednesday to finally approve emergency loans worth 130 billion euros (171 billion dollars), money which Athens needs as soon as possible to avoid defaulting on its debt.

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