Greece needs more aid, says Wolfgang Schaeuble

German Finance Minister Wolfgang Schaeuble
Image caption Mr Schaeuble said he was confident new measures to help Greece would be agreed

German Finance Minister Wolfgang Schaeuble has said the current aid package for Greece is "insufficient", adding there is a "real risk" of default if funds are not released soon.

In a letter to European Central Bank and International Monetary Fund leaders dated 6 June, Mr Schaeuble said a new package was needed.

He suggested a bond swap to give Athens more time to repay its debts.

A 110bn euro (£161bn; £98bn) Greece bail-out package was agreed last year.

Burden sharing

"The situation is difficult," Mr Schaeuble wrote.

"A return by Greece to the capital markets within 2012, as assumed by the current programme, seems more than unrealistic. This means the volume of the current programme is insufficient to cover Greece's financial needs.

"Against this background, I see the need to agree on a new programme for Greece."

The burden of any new aid package would need to be shared between taxpayers and private investors, Mr Schaeuble argued.

He said the best way to achieve this would be "through a bond swap leading to a prolongation of the outstanding Greek sovereign bonds by seven years, at the same time giving Greece the necessary time to implement fully the necessary reforms and regain market confidence".

Deficit cutting

At the end of last week, European ministers and the International Monetary Fund said the next tranche of the 110bn euro bail-out package would be paid, most likely in July.

Reports also suggested a new, extended bail-out was being finalised.

Jean-Claude Juncker, head of the group of eurozone finance ministers, said he thought extra help was likely, in exchange for additional deficit-cutting measures implemented by Athens.

Finance ministers are meeting on 19 and 20 June, and Mr Schaeuble wrote in his letter he was "confident" further help for Greece could be agreed.

Rising unemployment

Greece has implemented a series of austerity measures designed to cut its budget deficit.

These have proved deeply unpopular among Greeks, and there have been widespread protests as the cuts have begun to bite.

On Wednesday, official figures showed that the country's unemployment rate rose to 16.2% in March, up from 15.9% in February.

The number of people out of work was 811,340, a rise of 40% on the 578,723 unemployed a year earlier.

The unemployment rate among 15-24 year olds was 42.5%.

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