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Greece

Bundesbank expecting new bailout for Greece

Germany's central bank is expecting a new bailout for Greece by early 2014, according to a news magazine report. So far there has been no coment from the Bundesbank.

A report to be published in this week's edition of Der Spiegel news magazine quotes an internal document from the Bundesbank to Germany's finance ministry and the International Monetary Fund (IMF).

The report says the Bundesbank used the document to call to attention "considerable doubts" as to the ability of the Greek government to implement reforms required by international lenders. It also quotes the Bundesbank as citing "political restraints" in the recent approval of the payment of a 5.7-billion-euro ($7.6 billion) tranche of an existing bailout for Greece.

In the document, the bank predicts that European governments "will certainly agree a new aid program for Greece" by early 2014 at the latest. The central bank also described the risks of the current rescue program for Athens as "unusually high" and the performance of the Greek government as "hardly satisfying."

The report could rekindle a debate in Germany about whether Chancellor Angela Merkel has deliberately played down the prospects of further help for Greece before a September 22 election in which recent opinion polls suggest she is likely win a third term. Merkel and her finance minister, Wolfgang Schäuble, have said repeatedly that the rescue remains on track, rejecting the suggestion that Greece could require extra aid or debt relief.

Opposition figures, notably the Social Democrat's challenger for Merkel's job, Peer Steinbrück, have accused her of covering up the risks that German taxpayers will have to fund further eurozone bailouts.

The required cuts

Greece has already received two bailouts from the European Union and IMF totaling 240 billion euros, with 90 percent of those funds already paid out to Athens. It is to receive the rest of the funds by the end of 2014.

Last week, Greece's statistics office announced that unemployment had reached a record 27.6 per cent in May. The EU and IMF insist that Greece - now in its sixth year of recession - continue to make harsh cuts in exchange for the multibillion-euro payments.

mkg/pfd (AFP, Reuters, dpa, AP)