Greece misses 20 February Eurogroup chance

New Europe / Alexandros Michailidis

Economic and Financial (ECOFIN) Affairs Council meeting in Brussels, Belgium on Jan. 27, 2017

Heads of mission on Greece’s third bailout programme could return to Greece, as they are close to common ground.


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Europe’s bailout creditors finally got together on the same table with Greek government officials, after Dutch Finance Minister and Eurorgroup’s president Jeroen Dijsselbloem’s invitation.

However, no groundbreaking progress was achieved, according to Dijsselbloem’s statement that got released after a five-hours meeting. “There is a clear understanding that a timely finalisation of the second review is in everybody’s interest,” suggests Dijsselbloem, pointing to the “substantial progress “ that was achieved.

“We are close to common ground for the mission to return to Athens the coming week,” added Dijsselbloem in the statement, lowering expectations, as February’s Eurogroup seems to be another lost timing: “We will take stock of the further progress of the second review during the next Eurogroup,” concludes the statement.

A meeting with low expectations

Heads of mission from all EU institutions and the IMF were brought together on a meeting that has been called off once when Athens media reported that a meeting was  due to the end of the week.

According to an EU official, mission chiefs and high ranking officials of the European Commission, the European Central Bank (ECB), the European Stability Mechanism (ESM) and the International Monetary Fund (IMF), joined the Greek finance minister Euclid Tsakalotos and his alternate minister George Chouliarakis.

European Commission is represented by head of mission for Greece Declan Costello and Economic and Financial Affairs (ECFIN) General Director Marco Buti, while European Commissioner on the corresponding affairs Pierre Moscovici, was absent from the meeting, as Friday found him away from Brussels. The ECB is represented by its Member of the Executive Board Benoit Coeuré and Francesco Drudi. ESM’s ember of the Management Board on Rolf Strauch, joined his Manager Director Klaus Regling and the head of mission for Greece, Nicola Giammarioli. Poul Thomsen, Director of the IMF’s European Department, was joined by head of mission for Greece, Delia Velculescu.

The above heads of mission could come to Athens on the beginning of next week, only if there is a better basis for discussion, in order for the second review’s staff level agreement (SLA) to be achieved by the end of next week. The goal is for an agreement to be finalised before the Eurozone finance ministers meeting takes place on 20 February, as then Greece’s inclusion in ECB’s quantitive ease (QE) will still be possible. Greece looks forward to European Commission’s support, while all institutions seem to have reached a common line, concluding to a new proposal that was to be presented to Greece on Friday.

The new proposal requires Greece to legislate additional fiscal measures equaling to 2%  of GDP or less, triggered if the member state fails to meet certain budget targets. The 2% seems to be a level that is still under discussion.

An EU official suggested that the 1.8+1.8 billion will be legislated now and after 2018. Greece seems ready to settle on broadening of tax base of  the lenders would ask Greece to take 1.8 billion euros worth of new measures until 2018 and another 1.8 billion after 2018, focused on broadening the tax base and on pension cutbacks.

The 3.6 billion correspond to a 2% of GDP, has to be found by pension and social security reforms, as the tax base broadening that is expected to be legislated immediately, is fiscal neutral. Half of the measures should be legislated now in order for the IMF to be on board. The rest of the measures will be put to the fiscal break mechanism, where their activation will be conditional after 2018, while Greece is not willing to legislate contingency mechanism’s measures beforehand.

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