Brussels, 06/05/2014 (Agence Europe) - Achieving a primary budget surplus is not the only condition for eurozone countries to agree to the promise they made in November 2012 to reduce the Greek debt burden, said the Eurogroup on Monday 5 May, because all the structural adjustment programme criteria also need to be applied.
On reducing the Greek debt: “First question: Is it necessary? Is there a problem? When will it occur?” said the head of the Eurogroup, Jeroen Dijsselbloem. The troika (European Commission, European Central Bank and International Monetary Fund) will answer these questions during its next assessment, after the European elections. Dijsselbloem said there were a number of preconditions to be met, such as full application of all the measures in the structural adjustment programme.
Has the Eurogroup made debt reduction the new carrot for the implementation of reforms? “In a way, yes”, indicate those close to Greek Finance Minister Yannis Stournaras, pointing out that, in November 2012, the Eurogroup promised to consider new measures to reduce the Greek debt burden when the country achieved a primary budget surplus, but this gesture by the Eurogroup, as it pointed out in 2012, also requires the full implementation of the structural adjustment programme criteria in order to ensure that, by the end of the IMF's contribution, in 2016, Greece is able to have a debt/GDP ratio of 175% by 2020 and well below 110% by 2022. The European Commission's Spring Economic Forecasts, published on Monday, predict that the Greek debt will fall to 172.4% of GDP in 2015.
Dijsselbloem promised that the Eurogroup would keep its commitments, adding: “An element to take into account is the situation of the banks. The asset quality review will tell us how much money will need to be reserved or won't be needed. That process will take place this year and will also tell us how much money will be available. There are still a number of issues to be taken into account”. The Eurogroup will await the asset quality review results before opening formal talks in October on reducing the Greek debt since there is currently some €10 billion in reserve (funding for Greek banks that has so far not been needed). (EL)