Brussels, 20/02/2012 (Agence Europe) - Eurozone finance ministers were putting the finishing touches, in the afternoon of Monday 20 February, to Greece's second financial rescue package which includes public aid of €130 billion and the voluntary participation of private and institutional holders of Greek debt in a partial restructuring of that debt amounting to €100 billion. Judging from the comments of a number of ministers as they arrived in Brussels, there was no doubt over the bail-out, even though some points still remained to be discussed, such as arrangements for monitoring the application of the 2nd programme and the contribution to be made by the public sector to restructuring Greek debt.
“We are here today, ready to conclude this long process for the new Greek programme and we are ready to initiate the official procedure for the private sector involvement (PSI)” in restructuring Greek debt, said Greek Finance Minister Evangelos Venizelos. “I am optimistic but in any case we need clear political approval from the Eurogroup”, he added. His French counterpart François Baroin said: “We have everything we need for an agreement”. Also expressing optimism, German minister Wolfgang Schäuble set out the issues remaining to be resolved: - the extent of the involvement of the private sector in the restructuring of Greek debt; - the debt reduction trajectory for Greek debt, which is supposed to fall from 160% to 120% of national GDP by 2020, when the latest forecasts are suggesting the current trajectory would take it down to just under 130% of GDP; - the monitoring of budgetary and macro-economic reforms; and the contribution from the IMF (possibly €13 billion?). Greece has met the three preconditions for approval of the aid (see EUROPE 10556).
The €130 billion loan from the eurozone will offer Greece fresh respite until 2014, on condition that it meets its budgetary commitments and returns to growth next year. The money will come from the European Financial Stability Facility (EFSF), after the 1st programme was based on bilateral loan commitments worth €73 billion. Restructuring will begin as soon as the Eurogroup approval has been granted and will include the €15 billion Greece has to repay at the end of March.
Athens has been warned that no aid will be paid if it does not implement the draconian measures contained in the 2nd programme. These provide for a 22% reduction in the minimum wage in the private sector, 150,000 civil service redundancies by 2015, speeding up of the privatisation programme and measures to liberalise the economy. The Papademos government will also bring forward a list of priority measures to be implemented by the end of next month. A blocked account will also be set up to ensure that public and private creditors are repaid. (MB/transl.rt)