Brussels, 07/03/2014 (Agence Europe) - On Monday 10 March, the 17 eurozone finance ministers are due to assess progress in countries in receipt of aid. They will also look at direct recapitalisation of banks by the European Stability Mechanism (ESM) and recent documents from the European Commission assessing macroeconomic imbalances and issuing economic forecasts.
It became clear on Friday 7 March that Greece will not be able to reach staff level agreement with the troika of lenders (European Commission, European Central Bank and International Monetary Fund) ahead of the Eurogroup meeting, explained an EU source. Agreement is not expected among ministers and the troika will simply inform them of progress on the ground. On Thursday, the Greek central bank published its stress test results and said that Greek banks will need a further recapitalisation of €6.382 billion. Asked about the rumoured disagreement between the Greek government and the troika over the scale of the capital requirements, a source commented: “That's their figure”. A European Commission spokesman for economic and monetary affairs, Simon O'Connor, said on Friday that Greek banks should seek funding from private sources before requesting any public aid. On Friday, one Greek bank after another announced its funding strategy, and the Greek financial stability fund said it was prepared to provide the remaining €8bn from the bank aid package. O'Connor noted that the troika and the Greek government were working flat out to finish the current monitoring mission as soon as possible.
A high-ranking EU official said this week that once the mission was over, there wouldn't be another until after the elections. The outcome of the current mission should therefore result in a large aid instalment, given the big repayment deadline that is fast approaching.
The Eurogroup will discuss the situation in Cyprus, which introduced the remaining prior action last week, thus paving the way for payment of aid of €150 million from the ESM and €86 million from the IMF. The ESM will make its payment in early April.
The ministers will be briefed on progress in implementing the Portuguese aid programme, but decisions about exit from the programme are not expected this month. The high-ranking official commented: “Exit? This is for the Portuguese authorities to decide. There are pros and cons to whatever decision is made. The closer we get to the end of the programme, the better the basis for the decision will be. ”
The Commission will then brief ministers on the outcome of its assessment of macroeconomic imbalances in France and Italy. The new Italian finance minister will unveil the economic agenda of the new government under Matteo Renzi, and Germany, Austria and Luxembourg will be quizzed about their budgets. The countries had not yet formed a government when the Commission was publishing its opinions on national reform programmes.
The high-ranking official commented on the likelihood of agreement being reached on direct bank recapitalisation from the ESM: “I wouldn't bet my house on it, or even my car - maybe one of my bikes, the oldest one. ”
Directly after the Eurogroup meeting, there will be an intergovernmental conference on the bank resolution mechanism (see related article). (EL)