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European official says no eurozone country pushing for Greek default, or its exit from euro
LUXEMBOURG (AP) ' A senior European official vowed Tuesday that a Greek default was not an option and would be avoided even after Athens' admission that it would miss its deficit-reduction targets raised questions about whether it would receive its next bailout loan.
If Greece doesn't receive the euro8 billion ($10.8 billion) slice by mid-October, the debt-ridden country will be unable to pay pensions and salaries and eventually go bankrupt. Luxembourg Prime Minister Jean-Claude Juncker said after a meeting of eurozone finance ministers that he expected a decision about the loan to come sometime in October.
And European Monetary Affairs Commissioner Olli Rehn strongly suggested that Athens would get the loan, saying the country's spending cuts and other efforts "go a very long way to meeting the conditions" set by its creditors.
Greece said Sunday that it will run a deficit of 8.5 percent of economic output, or euro18.69 billion ($25.2 billion), this year ' far above the promised euro17.1 billion ($23.1 billion), which would have been 7.8 percent of GDP.
The news added to investors' fears that even the country's dramatic spending cuts and billions of euros in rescue loans from other eurozone countries and the International Monetary Fund may not be enough to get it back into a position where it can repay its enormous debts. It also sent the euro into a tailspin.
Concerns that Greece will never dig out of its mountain of debt ' and the volatility in markets that has accompanied the slow and often halting European decision-making process ' has led many observers to urge that Athens simply be allowed to default and maybe be forced out of the euro.
Juncker, who chairs the meetings of eurozone finance ministers, emphatically denied that such a solution was on the table.
"We had no one advocating a default for Greece," he told reporters in the early hours of Tuesday after an hour-long meeting. "Everything will be done to avoid that and it will be avoided."
Athens' admission that it would miss targets also cast a shadow over a second, euro109 billion bailout tentatively agreed in July, when it became clear that the initial euro110 billion rescue package would not be enough.
That deal has been held up in part by a Finnish demand that it be given collateral for any funds it puts up for that bailout. A deal to accommodate Finland's request was reached at the meeting.