Any accidental straying from the path of the Greek bailout plan seemed out of the question, in Luxembourg on Thursday 15 June, at the start of the Eurogroup meeting.
The aim of Athens and its institutional creditors was to finalise the second monitoring mission of the aid plan, opening the door for a further tranche of aid to be released and avoiding a Greek payment default. This tranche, payable in several instalments, is around €8.5 billion in order to cover, amongst other things, the reimbursement of Greek debt securities held by the ECB and the IMF and maturing the end of July.
To do this, the eurozone countries were called upon officially to note that the Greeks had accomplished the 140 prior actions asked of them. For the first time ever in the framework of a bailout plan, the Greek parliament had to adopt budgetary consolidation measures worth 2% of GDP to be applied when the bailout plan comes to an end in mid-2018 (see EUROPE 11799). In exchange, the Greeks will be able to adopt social or growth-promoting measures, particularly in the run-up to the 2019 general elections.
“Greece has met all its commitments. As far as we are concerned, it is done”, said Commissioner for Economic and Financial Affairs Pierre Moscovici, calling on Greece’s partners to take their responsibilities as well. The German finance minister, Wolfgang Schäuble, said that he was optimistic as to the possibility of an agreement on paying out a further tranche of aid.
The first unknown quantity: medium-term Greek debt relief
Towards the end of Thursday afternoon, the main unknown was the level of clarification of the language to be used for any measures to relieve the Greek debt on which the creditors of Athens may decide in mid-2018, only if they deem it necessary. Greece, which wishes to benefit from the protective shield of the ECB, and the IMF are calling for this. Germany, backed up by other northern countries, decline to enter into more specific commitments than those made in May 2016, particularly two months ahead of general elections (see EUROPE 11784, 11557).
The agreements reached remain the reference framework of the discussions, Schäuble stressed.
However, the French finance minister, Bruno Le Maire, said that the French proposal of linking the reimbursement of the Greek debt to growth levels in Greece (an idea once defended by former Greek minister Varoufakis) was “on the table”. We need “clear and long-term prospects on the debt”, he said, arguing that new elements on this controversial issue were just as much in Greece’s interests as those of the eurozone.
The second unknown quantity: IMF participation
The level of clarification of the Eurogroup’s language on medium-term Greek debt relief will be of decisive importance to the IMF. It will participate financially in an aid plan for Greece if it considers that the Greek debt, at nearly 180% of national GDP currently, is under control and viable in the longer term.
“There has been a lot of hard work to narrow differences”, said Christine Lagarde, Director General of the IMF, on arrival in Luxembourg. Hoping for a “good solution” at the end of the negotiations, she stressed the Fund's “constructive” approach, which is also “based on principles”.
Earlier that day, the Director General of the European Solidarity Mechanism, Klaus Regling, stressed that the eurozone’s expression of solidarity towards Greece equated to €9.9 billion of annual budgetary savings through loans at low rates of interest. (Original version in French by Mathieu Bion)