Brussels, 13/01/2016 (Agence Europe) - The finance ministers of the eurozone, meeting on Thursday 14 January, will take stock of the Greek and Cypriot bailout plans. In the framework of the 2016 exercise of the so-called 'European Semester' budgetary process, they will discuss the draft recommendation for the eurozone.
The Eurogroup hopes that three outstanding prior actions will be implemented before the end of the financial assistance plan for Cyprus, at the end of March. These are legislation on the sale of loans to third parties, the privatisation plan of the telecommunications operator and the unbundling of the energy company, according to a senior EU official. The approval of the institutions representing the creditors would pave the way for the disbursement of around €300 million from the European Stability Mechanism and €125 million from the IMF. A eurozone source said that there is no urgent need to receive this funding, but that it would send out an important signal which would allow Nicosia to exit the programme in a clear manner.
Greece. The Eurogroup will also discuss the Greek dossier. The monitoring mission of the implementation of the programme is expected to start early next week. According to a diplomatic source, this is expected to last at least three weeks. However, it will need to be concluded in order to allow a further tranche of aid to be paid out, so that Greece can honour a repayment of several billion euros on 24 February. This initial assessment “will by no means be easy”, the diplomat explained. The trickiest issues will be pensions reform, the budgetary objectives for 2016 and the mid-term budgetary strategy, the setting in place of the privatisation fund and the reform of the public administration, as well as certain structural reforms.
Early last week, Greece submitted its pensions reform plan. Its finance minister, Euclid Tsakalotos, has toured the European capitals to promote this sensitive reform. In this framework, he met his French counterpart on Sunday, his Finnish counterpart on Monday and his German counterpart on Wednesday. On Tuesday, he met the President of the Eurogroup, Jeroen Dijsselbloem. The same senior EU official said that the document on pensions provided by the Greeks seemed “highly ambitious”.
Portugal is not on the agenda of the Eurogroup meeting. The timing of the ministers' debate on the draft budget 2016 of the Portuguese government will depend on when the draft is submitted to the European Commission.
European Semester. As part of the 2016 exercise of the budgetary process known as the 'European Semester', the ministers will discuss the draft specific recommendation for the eurozone announced in late November by the Commission and to be approved by the Ecofin Council on Friday 15 January. Amongst other things, this draft recommends a broadly neutral budgetary orientation for 2016 and a reduction of public debt in 2017, the continuation of the employment and services markets reforms, a gradual reduction of non-performing bank loans and an improvement of the insolvency procedures for businesses and households (see EUROPE 11439). This is the first time that the draft recommendation has been brought forward to allow the Nineteen to take it into account in the implementation of their macro-economic policies.
The ministers will also share their experiences on the reforms of the national insolvency regimes in the financial sector. In this field, there are “significant differences” between these regimes, according to the senior European official, who went on to explain that the main issues to be dealt with include the leadtimes, which are very low in some cases, for the decisions to challenge the stocks of non-performing financial loans held by a financial institution and the predictability of the decisions.
On the economic situation, the Eurogroup will look at the strengths and weaknesses of the eurozone in the framework of the regular consultations carried out by the IMF. There is “no significant discrepancy” between the respective visions of the Eurogroup and the IMF on the economic situation in the eurozone, the source told us, adding that the IMF perceives that the downward trend of growth risks is consolidating. (Original version in French by Elodie Lamer and Mathieu Bion)