No conclusion on the second review is foreseen for Monday’s meeting of finance ministers of the Eurozone’s Eurogroup, according to a top EU official.
Monday’s meeting will only be expected to take stock of the situation regarding Greece’s second review process. The maximum expected by the EU official would be a progress statement that would bring the heads of missions of the institutions and their technical teams back to Athens.
The EU official encouraged Greece to wrap up with its part as soon as possible, as it is better to come to a conclusion sooner rather than later. “Waiting and waiting, as opposed to red wine, doesn’t make it better but worse.”
Greece will have to agree to pre-legislate measures for the 2019-2020 period, after the third bailout programme concludes.
Eurogroup’s president Jeroen Dijsselbloem is expected to stay with his assessment of the state of play on Greece, as the EU official suggests that only 1/3 of actions from the second review have been completed. “This has not changed, things could be better,” added the source.
So is the Eurogroup meeting in March going to give an end to the one-year delay of the second review? That is not sure either. “In March there is no way we will have a final-final agreement,” adds the EU official.
That will only be possible if Greece overcomes the hurdles and concludes the initial stage, reaching the so-called Staff-level Agreement (SLA). The political agreement that will be reached at the Eurogroup level is to come after that, but it seems that March is not going to be a good period for this to happen.
But the end will not come with the Eurogroup’s political endorsement, as it will then be up to national parliaments to ratify any agreement reached, and to the International Monetary Fund (IMF) to decide its participation in the Greek programme.
“They need to go back there and crunch the numbers”
IMF’s European chief Poul Thomsen has left a door open for a compromise in projections for the Greek economy, as this is the greatest difference between the IMF and the European institutions. The EU official suggests that this could be possible if the technical teams join national experts in Greece to clarify what the real picture of the Greek economy is.
Even the so-called 2% GDP measure plan, that was presented to the Greek finance minister Euclid Tsakalotos last Friday at the meeting that was organised by Dijsselbloem in Brussels, is a proposal that could change based on the numbers that the technical teams will conclude once they will come back to Athens.
This seems to be a “genuine misunderstanding” between the Greek government and the institutions, as Athens believes that this is a “take it or leave it” proposal, while the EU official suggests that this procedure will most probably alter the proposal, ending up at a better deal.
“If you look at the fiscal position of Greece as it appears to be, there is a reason to believe that some of that may be of permanent nature and that they will not only overfill their 2017, but also the 2018, 2019 and 2020” added the EU official.
“This is far beyond from what Eurostat can tell you,” he added, as the projections are on what has already been booked and you have the correct cash transformation. “The confirmation by Eurostat simply shows you just that the numbers are correct. Are the notifications important and are the 1st of April notifications of the programme? No.”
“You need to have a very close look at the tax receipts and see if this is a result of arrears payback, or if there is end-disbursement to hospitals for example,” adds the EU official.
“Some people may believe that this is a boom in economy, while others may think it is because of ‘one off’ tax arrears, it may be some of both. So, in order to see what it is of structural nature, you need the institutions to sit on their backside at the Greek tax office and go through the whole thing. If they don’t go back, there is no way you can analyse that,” which is after all “one of the purposes of the second review”.