Following a marathon session, the Eurozone finance ministers succeeded in agreeing, during the night from 21 to 22 June, on measures to accompany Athens' departure from the third and final financial bailout plan, on 20 August of this year.
According to the Eurogroup President, Mario Centeno, there will be no more aid plans for Greece. “The Greek crisis ends tonight in Luxembourg”, said the Commissioner for Economic and Financial Affairs, Pierre Moscovici. The Greek finance minister, Euclide Tsakalotos, said that his country was “turning a corner” after eight long years of financial tutelage. “All building blocks are there to leave the programme with confidence, return to the markets and move from an adjustment agenda to a growth agenda”, he added.
Athens and its creditors have finalised the fourth monitoring mission of the third plan. The Eurogroup approved the 88 priority structural measures passed by the Vouli in mid-June (see EUROPE 12041). In return, it will pay Greece a tranche of aid of €15 billion, to allow Athens to cover the immediate servicing of its debt and go towards a cash buffer of €24.1 billion to ensure a soft landing for the country's return to the markets over the 22 months following the end of the aid plan.
The ministers also noted that Athens would be subjected to reinforced budgetary supervision until 2022. Quarterly reports on the state of progress of the reforms in Greece will be drawn up. The authorities will also be required to maintain a primary budgetary surplus (not including servicing of the debt) of +3.5% of GDP until 2022 and of 2.2% of GDP on average up to 2060.
Debt measures. The debt relief measures were the most sensitive issue. The aim was to ensure that the gross annual financial needs stay below 15% of Greek GDP up to 2022 and 20% thereafter (see EUROPE 11784).
Provision has been made for a ten-year extension of the maturities of the loans under the EFSF, plus a further moratorium, from 2022 to 2032, on the repayment of the loans taken out with the EFSF.
Up to 2022, Athens will recover the profits made by the ECB and the national central banks under the SMP and ANFA government debt purchase programmes. Additionally, the interest rate margins on the buyback tranche under the second bailout plan have been written off.
Both measures are conditional on the implementation of reforms and compliance with the budgetary requirements over the reinforced supervision period.
On the other hand, the French proposal to index the level of repayment of the Greek debt on the country's growth has been scrapped (see EUROPE 11944).
“This is one of the gestures” France has agreed to make, said Bruno Le Maire, presenting himself as a “facilitator” in the negotiations. The French minister stressed the duration of the moratorium and a revision clause that will allow a stock-take, in 2032, of the viability of the Greek debt, to consider whether further measures will be necessary.
IMF. This time, the IMF will not be financially supporting Greece.
However, its Director General, Christine Lagarde, gave a positive assessment of the medium-term debt relief measures that will facilitate Athens' return to the markets, but declined to be drawn on the viability of this debt up to 2060.
The Eurogroup declaration is available at: https://bit.ly/2ttugIn (Original version in French by Lucas Tripoteau and Mathieu Bion)