Bill mounts for Greek bailout as ministers meet

(BRUSSELS) - Eurozone finance ministers discussed Monday how to bring Greece back from the brink after a report obtained by AFP showed that easing the terms of its debt bailout could cost nearly 33 billion euros more.

Greece, in urgent need of aid to remain afloat, has not been able to keep up with the terms of its second debt rescue as the economy has tanked, undercutting efforts to meet tough debt and deficit targets.

The only option now seems to be to give Athens more time and easier terms but that comes at a cost which is rising fast as the economic outlook darkens.

"A financing gap over the programme has emerged due to lower privatisation proceeds, slower growth and concomitant lower revenues, and a longer horizon for correcting the excessive (public) deficit," a draft report prepared by Greece's international creditors said.

Greece's "troika" of creditors -- the European Union, International Monetary Fund and European Central Bank -- had expected Athens would need 6.0 billion euros in additional funding to 2014 if the bailout was extended by two years.

But now they estimate Athens will need 15 billion euros instead to cover 2013-2014 and 17.6 billion euros for 2015-16, up from the anticipated 14.1 billion euros, according to the report seen Monday by AFP as eurozone finance ministers met to discuss the Greek bailout.

Ministers are relying on the long-delayed report to assess Athens' efforts to meet its targets and decide whether to release its next aid tranche of some 31 billion euros.

The report said it would be "prudent to assume that markets may remain sceptical about Greece for a longer period, given the vulnerability resulting from the high debt ratio and political risks."

In other words, Greece would have to rely on its creditors for longer.

Earlier, Jean-Claude Juncker, who heads the Eurogroup of finance ministers, said the troika report was positive overall and concluded that Athens had "delivered" on its reform pledges.

Juncker said ministers finally got the report Sunday and it "is positive in its fundamental tone because the Greeks really delivered. Now it is for us to deliver."

In the run-up to the meeting, officials made plain that no final decisions were expected, with perhaps another gathering needed before Greece can get its aid payment.

Time is pressing however. Greek Prime Minister Antonis Samaras has said his country will be broke by Friday if it does not get the aid and while officials have played down that possibility, it is clear a decision is needed soon.

"We need to find creative solutions," Austrian Finance Minister Maria Fekter said as she went into the meeting while IMF head Christine Lagarde called for a "real fix, not a quick fix".

Juncker, who is Luxembourg's prime minister, said a new austerity package adopted by the Greek parliament Wednesday and a cost-cutting 2013 budget agreed late Sunday were "very ambitious" and "fulfills our wish list nearly completely".

But there would be "no definitive decision" today, he added.

As discontent mounts over austerity across Europe, German Chancellor Angela Merkel, the leading proponent of belt-tightening as the answer to the euro debt crisis, was booed during a visit to Portugal on Monday.

Her trip coincided with the latest review of Lisbon's 78-billion-euro ($101-billion) international bailout programme, extended on condition the country make vast budget savings to plug a mounting public deficit.

"The programme is being applied by Portugal in an excellent manner. It is a great exploit," Merkel said at a joint news conference with Prime Minister Pedro Passos Coelho.

"My visit is a chance to get to know the country better and to bring hope. I sense a great determination to overcome a difficult situation," she said.

"Of course a programme of its kind sparks major debate. It is a long and hard process and I know it requires many sacrifices," she added.

The eurozone finance ministers' meeting is expected to last well into the night, followed by a similar gathering of all 27 EU states Tuesday expected to focus on how to boost the slumping economy and the bloc's hotly contested 2014-20 budget.

Economic and Financial Affairs Council