Brussels, 22/06/2012 (Agence Europe) - On Thursday 21 June, eurozone finance ministers decided to release a billion euros of financial aid for Greece, part of a sum initially earmarked for Greek banks but put on hold by the country's international lenders when Greece only had a caretaker government. Now that a coalition government has been formed after Sunday's elections, led by Conservative party New Democracy and backed by the Socialist PASOK party, the Eurogroup is pleased that the caretaker prime minister, George Zanias, has been replaced by Vasilis Rapanos, and has said that the country wants to remain in the eurozone and is prepared to abide by its pledges under the second Greek bailout.
The head of the Eurogroup, Jean-Claude Juncker, said that some of the billion euros would be used to pay Greece's contribution to the European Stability Mechanism (ESM), which politicians hope will be up and running in time for the next Eurogroup meeting (9 July 2012).
Return of the fact-finders. Greece's lenders want a clear view of the country's economic and budget situation before agreeing to any renegotiation of the second structural adjustment programme and will be sending the troika fact-finders back to the country (the troika being the European Commission, the ECB and the IMF). Juncker said the new government was expected to invite the fact-finders back on Monday to urgently review the situation. The IMF director general, Christine Lagarde, said their job would be to assess the situation and decide on the next stages of respecting the targets, pointing out that the fact-finders had not been in the country since March and the second austerity package had been held up during the elections. Euro Commissioner Olli Rehn said they needed to see what had been done, what had not been done and what needed to be done to get the programme back on track. Juncker said that after the fact-finders' visit, the updated memorandum would include new measures to be taken before any cash was forthcoming, but there would not be any cash-flow problems in Greece in the meantime, according to Rehn, as the Commission is closely monitoring the situation.
The parties in the coalition government campaigned for a renegotiation of the second bailout package. Going along with the general targets, New Democracy called for two years more time to meet the budget targets, saying it was prepared to do more on the privatisation front, introducing further structural reforms and slimming down the civil service. Juncker said that extra time should be considered, but there should not be any substantial changes to the memorandum. Under the current programme, €11 billion-worth of extra spending cuts need to be made in 2013 and 2014, which are due to be identified by the end of the month. (MB/transl.fl)