On Monday 23 January, the European Stability Mechanism (ESM) formally adopted the short-term Greek debt relief measures which were the subject of a political agreement between Athens and its institutional creditors in December 2016.
The measures approved should lead to a "cumulative reduction of Greece's debt-to-GDP ratio of around 20 percentage points until 2060 (and to) Greece's gross financing needs falling by almost 5 percentage points in the same time horizon", said the executive director of the ESM, Klaus Regling, in a press release. He added that the debt relief carries "no budgetary implications" for the creditors of Athens.
In December 2016, the Eurogroup decided on three types of short-term relief measures for Greek debt not requiring the approval of the national parliaments of Eurozone countries, which normally approve any new financial assistance to Greece (see EUROPE 11682). These measures are as follows: - amendment of the repayment profile of the Greek debt, extending the average maturity of the instruments from 28 years to 32 and a half; - the adoption of measures aiming to reduce the risk related to the interest rate; - the removal, for 2017 alone, of the provision (which is punitive for Greece) inherited from the second Greek bailout plan, whereby the interest rates laid down for certain debt securities will increase if Athens does not pay back enough of its debt by means of privatisations.
The finalisation of these measures by the ESM was halted in December after the government in Athens unilaterally announced the adoption of social measures mobilising a proportion of the primary budgetary surplus (not including servicing of the debt) for 2016 (see EUROPE 11690). Since then, Greek radical left-wing government has pledged that the measures recommended (e.g. a boost to pensions) were valid only for 2016 and it has also undertaken to notify its creditors ahead of any further initiatives with a budgetary impact.
Athens called upon to renew its commitments
In Brussels on Thursday 26 January, the Eurozone finance ministers will take stock of the discussions underway to finalise the second monitoring mission of the third Greek bailout plan, with an envelope of €86 billion from the ESM.
The creditors of Athens are hoping for reassurances from the Greeks regarding their intention of making additional budgetary efforts to plug a budgetary gap estimated by the Europeans as equivalent to 0.4% of Greek GDP by 2018. All thoughts will also be turned to the financial participation of the IMF in the third Greek bailout plan, an issue raising many comments and questions (see EUROPE 11703). (Original version in French by Mathieu Bion)