The meeting held late on Monday night established that individual members of the Eurozone must implement strict austerity measures – with support from other members.

It is quite clear that the credibility of the euro as a currency was the overriding factor that led Finance Ministers to convene to discuss what should be done in the case of default by a eurozone member.

The first plan to be mooted was the setting up of a European Monetary Fund with the capacity to dish out – what some columnists and analysts have labelled – sadistic. The proposals involved the capacity to prevent nations from tapping into cohesion funds, to prevent them from voting at European Council meetings and to even eject them from the eurozone.

The other idea, was for a multi-billion euro bailout of Greece. This at first gave rise to worry that Maastricht would have to be renegotiated as the treaty specifically prevents bailouts. In the event, Greece did not ask for the bailout and the progress being made with its austerity measures have been deemed as ‘enough’ to allow confidence in the market to allow it to borrow at rates which are not through the roof. However, it must be noted that Greece is borrowing at interest rates of 6.5 per cent in comparison with 4.5 per cent which is the norm.

Both ideas, quite thankfully, have been shelved. It has emerged that the Eurofin Ministers were more inclined to accept France’s proposals of introducing much stricter monitoring of Eurozone states’ financial affairs, coupled with strict austerity measures. But, it was agreed in principle, that Greece will get financial support. This will not be in the form of a bailout, but rather in direct loans from other Eurozone states – primarily Germany. These loans are to be used in the issuance of Greek bonds, the sale of which will allow the beleaguered economy to cut back on its massive 12.7 per cent of gross domestic product deficit. This, coupled with the austerity measures which range from pay freezes, raising the retirement age and a concerted drive to improve production to wage ratio should allow Greece to emerge from its crisis with the euro’s value and credibility still intact. Of course, it will come at a price, with some already forecasting that the Greek economy will contract by a staggering four per cent by the end of the year.

Of course, being a eurozone member, Malta will be expected to do its bit to keep Greece afloat. But in an economic climate where literally every euro counts, it can only be taken positively that while the Maltese coffers might have to cough up a small loan – it will not be asked to fork out ‘dead’ money to help finance a bailout of another nation. Some remarked that both the bailout plan and the EMF plan would have been discriminatory to countries that have sound finances – Malta being one of them. While things are not all rosy, one must bear in mind that we have a ‘good’ deficit close to the Maastricht criterion government expenditure balances out and that we have had no financial meltdown. Whatever the overriding public opinion may think, Malta’s finances are in a good state – one of the main reasons why this publishing house believes that it would have been highly unfair to bailout Greece. This new position, will however, impact the European economy and it has already been suggested that Germany, with a surplus of some 2.9 per cent, ‘could do a little something’. That little something has since been quantified into suggesting that the Germans buy German – at least for a little while. This thinking suggests that other European economies will then be able to up their production levels and export. But– with out costs to productivity ratio (in Europe), will we be competitive? One can never dismiss the fact that Germany is where it is precisely because of its excellent wage to production figures. As ever – we are in flux.