Athens, 01/04/2014 (Agence Europe) - With an optimistic sigh of relief, eurozone finance ministers reached agreement on Tuesday 1 April on the outcome of the fourth troika monitoring mission (the European Commission, the European Central Bank and the International Monetary Fund) in Greece, which took almost eight months to complete.
The decision paves the way for disbursement of aid totalling €8.3 billion, to be paid out bit by bit as “prior actions” are accomplished. Issues relating to exit from the aid programme will start to be discussed in September in theory, ministers noting at this stage that Greece desires to return to financial autonomy.
As soon as the prior actions have been implemented and the parliaments that need to give their go-ahead have done so, the Council of Ministers' national experts will endorse the payment of a first sub-instalment of €6.3 billion. The Greek parliament voted through a batch of measures on Sunday, which will now be checked to verify that they match the prior actions. The €6.3 billion will arrive just in time to pay some of a payment of €9.3 billion that becomes due at the end of May (to repay maturing government bonds). The IMF is expected to contribute a little over €3 billion before the end of May. The IMF is reported to have received assurances from the eurozone that the Greek programme will be fully paid up until Greece returns to the money markets unaided.
The head of Eurogroup, Jeroen Dijsselbloem, said: “we've had reassurances by the troika that Greece is fully financed for the coming 12 months.” After the next troika mission in the summer, the eurozone ministers will look at the question again. Dijsselbloem added: “We take note of ambition not to have another programme, we would like to share that ambition, too early to say. Concentrate now on commitment of the current programme.” The day before, he said that Greece's desire to return to the markets unaided was a positive move. Athens is planning to issue medium-term sovereign bonds gradually to test the waters.
Financing of the Greek programme has been achieved through temporary budget transfers among different ministries. The Greek government's pledge to improve the privatisation of public companies should also provide some elbow room.
Eurogroup praised the country's budget performance, beating the 2013 targets and on track to meet the 2014 targets, “allowing Greece to provide additional financing for debt servicing and to undertake some one-off spending in 2014 to bolster social cohesion.”
The finance ministers say that two big banks, Eurobank and National Bank, need to be recapitalised before the summer break: “We now expect that also the remaining two core banks will raise their capital needs swiftly first and foremost from private investors.” At least €10 billion of the remaining cash for Greek banks from the eurozone is to be kept to one side until the results of the ECB and European Banking Authority's stress tests have been published.
Commenting on the painful reforms that have been introduced in Greece, the head of the ECB, Mario Draghi, said Greece “needs to fully implement all the structural reforms that have been agreed.” Eurogroup is delighted with the government's commitment to reform the market for goods and services, liberalise the transport, accommodation rental market and regulated professions. The eurozone says it is important to make progress with reforming the civil service and the labour market.
In June and July, two further sub-instalments of aid of €1 billion each will be paid out as long as the six prior actions for each have been introduced, explained Dijsselbloem.
Eurogroup is currently examining plans unveiled by the Greek government to stimulate economic growth. The plans will be fine-tuned over the next few weeks by the government, working with the head of the European Commission's task force for Greece. The plans should enable new cash to be forthcoming from international organisations and the EU Structural Funds to underpin green shoot of recovery in the country. (EL)