Brussels, 09/02/2016 (Agence Europe) - In Brussels on Thursday 11 February, the Finance Ministers of the eurozone will discuss the draft Portuguese budget for 2016 and take stock of the monitoring mission of the representatives of the creditors of Athens.
The Eurogroup's discussions of Portugal's draft budget for 2016 will be based on the opinion drafted by the European Commission at the end of last week (see EUROPE 11484). It will adopt a declaration acknowledging that this draft budget runs the risk of failing to comply with the Stability and Growth Pact, amongst other things due to the inadequacy of the budgetary effort in structural terms (not including conjunctural effects). “It is clear that because of a much higher GDP deficit, Portugal won't leave the excessive deficit procedure” until there is a clear vision of its medium-term trajectory, a senior European official said. In its winter economic forecasts, the Commission predicts deficit in nominal terms of 3.4% of GDP for Portugal, but this estimate fails to take account of the additional effort agreed to by the Portuguese government at the last minute to avoid having its draft budget rejected (see EUROPE 11483).
Greece. The ministers will take stock of discussions between the 'institutions' (Commission, ECB, IMF and ESM) and the Greek authorities in the framework of the first monitoring mission of the third Greek bailout plan. Talks are going well, this source told us, and everybody hopes for a conclusion in the fairly near future, but “quality goes before speed”.
Earlier this week, the Greek finance minister, Euclid Tsakalotos explained that the 'institutions', which have broken off their mission, are expected to return next week. “From the moment that they do return, we will have a two-week deadline to complete the review”, he added, quoted by the Greek press. “If the review is due for completion in May or June, we will be in serious trouble”, he said. In Brussels as well, there was talk of a feeling of urgency. Greece's liquidity situation is expected to be tense in February, warned the Director General of the European Stability Mechanism (ESM), Klaus Regling, after the last meeting of the Eurogroup (see EUROPE 11468). In the first half of 2016, Greece has repayments of €4 billion to honour.
The ball is in the institutions' court and “they need to have a constructive attitude”, government spokesperson Olga Gerovasili said on Tuesday 9 February, quoted by Reuters.
The following subjects will be on the table: the budgetary trajectory for 2016, pensions reform and the reform of the public administration, as well as the creation of a privatisation fund.
Progress has been made on pensions reform, this source said. The questions raised are: what replacement rate? How many years will people need to work before they can retire fully? The revised system must also work as an incentive by tackling the informal areas of the Greek economy.
The same source also indicated a certain amount of resentment in Brussels at the politicisation of the Greek administration. Various appointments seem to be showing that the declaration of the eurozone summit of July 2015 has not been totally taken on board, we were told. The declaration stipulates that the Greek authorities must adopt measures to “modernise and significantly strengthen the Greek administration and put in place a programme”, under the aegis of the European Commission, “for capacity-building and depoliticising the Greek administration”.
Transparency. The President of the Eurogroup, Jeroen Dijsselbloem, is to present an initiative aiming to increase the transparency of the work of the 19 ministers by means of increased publication of documents, such as draft annotated agendas, correspondence from the President to his colleagues and technical working documents submitted to the Eurogroup.
Lastly, the ministers will hold an exchange of views on the international role of the single currency on the basis of the Commission study, which identifies no obstacles to the use of the euro in international trade. (Original version in French by Mathieu Bion and Elodie Lamer)