Brussels, 13/11/2012 (Agence Europe) - On the evening of Monday 12 November, eurozone finance ministers decided that they would allow a week to solve the two remaining problems, namely the trajectory of Greek debt reduction and additional financial needs for the country, which has now been given until 2016 to reduce its structural deficit to 4.5%. A new meeting has been arranged for 20 November, when a definitive decision will be taken about disbursement of the next instalment of aid to Greece, €31.5 billion. Reuters says German government sources suggest that eurozone nations may decide to combine a number of aid instalments and pay out more than €44 billion in one go. A spokesperson for the Greek finance ministry said no payment decision had yet been taken.
The head of Eurogroup, Jean-Claude Juncker, said that eurozone nations will use this week to begin the authorisation procedures at their various parliaments. Greek finance minister Yannis Stournaras said the idea was for the cash to be paid out at the end of November or beginning of December. In order to secure the new payment, Athens must complete a number of “priority actions” demanded by the eurozone in September (see EUROPE 10706), but IMF director general Christine Lagarde said a number of the actions needed clarification.
Daniel Cohn-Bendit and Rebecca Harms, co-presidents of the Greens/EFA party at the European Parliament, regret the new delay in paying the new aid instalment, commenting that this continual moving of the goalposts for Greece's bailout is damaging the EU's credibility and pushing Greece to the edge of the abyss. Elisa Ferreira (S&D), a spokeswoman for the European Parliament's Economic and Monetary Affairs Committee, called on the ministers to release the aid as soon as possible.
Debt reduction trajectory. The second Greek bailout stipulates that debt must be reduced to 120% of GDP by 2010. Although the IMF is demanding that this deadline be adhered to, Lagarde said there were differences of opinion about the matter and Juncker says that Europe feels that the deadline can be postponed until 2022. His view is echoed by France, where Pierre Moscovici called on his partners to be pragmatic about the lines they had drawn in the sand. Luxembourger Luc Frieden said that a solution would be found over the next few days to ensure Greece is able to roll over its debt unaided on the capital markets in a few years' time.
The preliminary report of the troika (Greece's international creditors, namely the European Commission, the European Central Bank and the International Monetary Fund (IMF)) says that extending the deadline would cost €32.6 billion. Although the IMF wants banks and other institutional lenders to write down some of their Greek bonds, Juncker said that public bodies that own Greek bonds would not have their bonds downgraded. On Tuesday, Germany made it clear that it strongly opposes any write-down. The idea that taxpayers in countries that have lent to Greece should have to suffer losses was ruled out by Euro Commissioner Olli Rehn, who said that a combination of factors would ensure Greece's debt was sustainable. Several options are on the table, like reducing interest rates (an idea backed by Germany), extending the maturity of the loans, and Greece buying up its own debt with money lent by the European Stability Mechanism (ESM).
Sixteenth of November deadline. On Tuesday, Greece raised €4 billion for one and three months at slightly higher interest rates to use to meet its 16 November deadline while waiting for the aid from the EU to arrive. Eurogroup has said that Greece will not default.
Stournaras welcomed the fact that the eurozone had recognised the scale of the efforts made by Greece. He told people living in Greece that the worst of the structural adjustment programme was now behind them. Like the IMF and the Commission, Eurogroup welcomed the Greek parliament's passing of two key packages last week (one on austerity measures and one on the budget for 2013). Only Anders Borg, Sweden's finance minister, said that the long-term credibility of the recommended measures was “an open question.” (EL/transl.fl)