Eurozone Faces New Financing Issues

The euro began the week below $1.30 on as the bloc headed for another week of tough decisions. The common currency was trading at $1.2718 as the region's finance ministers prepared for a summit at which the funding of several of the eurozone's weaker members is expected to take precedent. The Wall Street Journal reported that Portugal, Greece and Cyprus are all expected to need more money despite the eurozone's previous bailout expenditure of more than 200 billion euros. As the bloc works out a solution, tensions are expected to run high as September elections in Germany mean Angela Merkel, who is expected to win reelection, will be standing her ground. In Portugal, officials have made it clear they are hoping to avoid a second bailout but the nation is expected to repay 14 billion euros worth of maturing debt in 2013 and 15 billion euros of debt in 2014. In the terms of its bailout, Portugal is forecast to raise 16.4 billion euros from the markets by 2014. However, many are worried about political tension in Portugal as the nation's coalition government holds fragilely together; which is affecting investor confidence and dragging down its financing. In Greece, the question of debt relief has been a hot button between the EU and the International Monetary Fund. The nation's international creditors will need to reach an agreement on the subject by October, but both sides remain at odds. The IMF is insisting that the nation repay all of the funds lent by the organization. However, several eurozone countries like Germany and Austria have been very vocal, saying that the IMF should be required to take losses on the bailout just as eurozone lenders have. Finally in Cyprus, it is becoming evident that the 10 billion euro bailout, which was agreed upon about a month ago, will fall short of the country's needs. Eurozone officials have admitted that the aid agreement was based on a best case scenario, and as officials work to revise their projections for the tiny island nation, many are expecting to see a large gap in funding.