The economic situation in Greece may not have officially been on the Eurogroup agenda, but the European Stability Mechanism (ESM) Managing Director, Klaus Regling, is ringing the alarm bell for Athens.
According to Regling, Greece’s credit spreads are up by 50 basis points over the last several weeks, following the controversial announcement of handouts and tax cut measures by Greece’s Prime Minister Alexis Tsipras.
During a briefing of reporters in Brussels after the 16 May Eurogroup meeting, Regling said “We are worried about the preliminary measures. The 3.5% target may not be reached by a significant margin this year or, possibly, next year,” adding that the EU institutions do not have a complete assessment.
“I continue to support the IMF’s early repayment from Greece,” added Regling. “The rules will apply as this early repayment should be approved by the ESM and EFSF member states,” he said, leaving all options open.
Eurogroup President Mario Centeno avoided answering questions about the situation and insisted on a more political dimension. “I could repeat about credibility and what we expect about credibility,” said Centeno. “It is very important that Greece continues to recover the way we have witnessed over the last two years,” he added.
The discussion will be continued during next month’s Eurogroup meeting where Centeno said, “We hope to discuss the third enhanced surveillance report by the Commission. Greece has overachieved on its fiscal targets so far. We expect the commitment with the Eurogroup to continue to be respected so that Greece continues to enjoy investors’ confidence in the future.”