In Brussels on Wednesday 13 June, Alexis Charitsis, the Greek Alternate Minister of Economy and Development, presented the Greek long-term growth strategy, with the third and final Greek aid plan to be concluded in August.
The objectives Charitsis listed comply with the preferences of Greece’s institutional creditors, which want Athens to continue its efforts to carry out socio-economic reforms.
The presentation came in parallel to discussions launching at the Vouli, the Greek single-chamber parliament, over the priority measures to be voted through in the framework of the fourth monitoring mission, for adoption on Thursday.
“At next week’s Eurogroup [in Luxembourg on 21 June], we expect a global agreement to be reached”, said Charitsis, who favours an equal partnership between his country and its creditors.
The Greek long-term growth strategy, which is part of the post-aid plan discussions, is the subject of particular attention. Through this strategy, which Euclide Tsakalotos presented to the Eurogroup in April (see EUROPE 12011), the Greek government aims for an average annual growth rate of 2% of GDP up to 2022, and hopes for a significant rate after that.
“This is not an easy task”, Charitsis acknowledged upon departure. He added that all Greek political parties were involved in the discussions, dissipating doubts amid possible changes of political majority in the future.
Five pillars. Athens aims to consolidate its recent budgetary performances (see EUROPE 12007), with the country required to maintain a primary budgetary surplus (not including servicing of the debt) of 3.5% of GDP up to 2022, then of 2% of GDP on average up to 2060 (see EUROPE 11810).
The Greek authorities also aim to continue reforms to create conditions for sustainable and structural growth. This will involve updating the administration, reforming the justice system and tackling undeclared work. Athens will also support key sectors for the national economy, such as tourism, energy, agri-food and infrastructure.
The management of public assets and the development of the non-performing loans ratios will also come in for close scrutiny.
Charitsis also stressed the Greek authorities' determination to create the conditions for “fair and inclusive growth”, with the 2019 general elections coming into focus.
To achieve its objectives, Athens will use the various financial tools available to it: structural funds, public investment programmes and the financial markets.
Debt relief measures expected for 21 June. Charitsis was then asked about his expectations of the Eurogroup meeting on Thursday 21 June.
This meeting is expected to take note of the end of the third bailout plan in mid-August, set the post-programme supervisory framework, disburse an amount (up to €20 billion) to help Greece build up a cash buffer with a view to its return to the markets and decide on debt relief measures.
The minister first of all stressed that Athens will not seek a preventative line of credit from the European Stability Mechanism (ESM). He also anticipates that the Greek public debt relief measures will be clearly decided upon.
“This will be absolutely crucial for the Greek economy, in order to return to the markets, provide confidence to the investors, and to exit from the programme successfully”, he said.
These measures could take several different forms, for instance an extension of the loan maturities of the European Financial Stability Facility (EFSF), an advance payment on the loans with the IMF or via Greek loan facility and the Eurosystem, thanks to the ESM funds, or a system to index the level of debt repayment to the level of growth in the Greek economy (‘growth-adjustment mechanism’) (see EUROPE 11944).
There are also reportedly plans to on-lend the profits made by the ECB and the national central banks under the SMP (Securities Markets Programme) and ANFA (Agreement on Net Financial Assets) programmes and reimburse the interest rates of certain loans taken out with the EFSF. These transfers in Greece’s favour, representing €4 billion, could be made in the form of four envelopes of €1 billion up to 2022, subject to the implementation of structural reforms and compliance by Athens with its budgetary requirements.
Finally, another major question in the run-up to the Eurogroup, the financial participation of the IMF in a specific programme, seems compromised, partly due to reasons of timing. However, on the EU side, it is hoped that the Washington-based institution will give a positive assessment of the debt measures under consideration, to reassure the financial markets.
Technical assistance with the reforms. On Wednesday, the Commission gave its green light to 32 requests for support issued by Greece in the framework of the Structural Reform Support Programme (SRSP).
This support will be financed to the tune of €20 million through voluntary transfers made by Greece from the ‘technical assistance’ plank of the structural and investment funds to the SRSP. The projects concerned by this technical assistance aim, amongst other things, to modernise the public and judicial administration and to tackle fraud and corruption. (Original version in French by Lucas Tripoteau)