Saturday

4th Jul 2020

Troika: Greece should get next loan, remains in deep trouble

  • German daily Bild the same day reported that Greeks have stashed up to €200 billion - twice the bail-out sum - in Swiss bank accounts in capital flight since the crisis began (Photo: danoots)

Greece should get the next €8 billion tranche of aid promised to it but its economy remains in deep trouble, its international lenders have said.

In a keenly awaited report, obtained by the Associated Press, the European Commission, European Central Bank and International Monetary Fund noted that while the money should be paid to Greece as soon as possible, with the country at risk of soon not being able to pay its bills, its "debt dynamics remain extremely worrying."

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

Crucially the inspectors also believe that a second international loan to Greece, finally agreed with great difficulty on 21 July, is not enough to be a real lifeline to Athens.

It said that while the second loan €109 billion bailout would help Greece's immediate financing needs "this could not suffice for the debt dynamics to be described as sustainable" if the country's internal reforms are insufficient.

“When compared with the outlook of a few months ago, the debt sustainability has effectively deteriorated given the delays in the recovery, in fiscal consolidation and in the privatisation plan, as well as the perspective of bank recapitalisation.”

The report will feed into crucial discussions by eurozone leaders over the coming days, culminating in a summit in Brussels on Sunday where the state of Greece's finances, European bank recapitalisation and establishing a bulletproof bailout fund are all on the agenda.

The so-called troika of lenders have recently been increasingly critical of Greece's pace of internal reforms, putting the release of the €8 billion tranche - part of last year's first €110 billion loan - into jeopardy. The criticism comes even as ordinary Greeks take to the streets in their thousands to protest the cuts to pensions, public sector wages and public services.

Meanwhile eurozone countries are at odds over much of a haircut private investors should take on Greek debt, having agreed a 21 percent voluntary haircut as part of the July deal. Germany is pushing for a much greater writedown, resisted by France whose banks are highly exposed in Greece.

Greek civil servants block troika from entering finance ministry

Inspectors from the so-called troika of the EU, European Central Bank and the International Monetary Fund returned to Athens on Thursday to review the Greek government’s austerity work, only to find staff from seven key ministries blockading their way.

EU plans tougher checks on foreign takeovers

The EU and its member countries are worried that foreign powers, such as China and its state-owned companies will take advantage of the economic downturn and buy up European firms

Vestager hits back at Lufthansa bailout criticism

Commission vice-president in charge of competition Margarethe Vestager argued that companies getting large capital injections from the state during the corona crisis still have to offset their competitive advantage.

News in Brief

  1. EU grants Remdesivir conditional authorisation
  2. French prime minister and government resign
  3. France lied on Nato naval clash, Turkey claims
  4. EU highlights abuses in recent Russia vote
  5. Belgium bids to host EU mask stockpile
  6. France shamed on refugees by European court
  7. French and Dutch police take down criminal phone network
  8. EU launches infringement case on Covid-19 cancelled trips

Coronavirus

EU leaders to reconvene in July on budget and recovery

Most EU leaders want an agreement before the summer break, but the Dutch PM, leading the 'Frugal Four', warned there might not even be a deal then. But the ECB's Christian Lagarde has warned of a "dramatic" economic fall.

Coronavirus

EU leaders seek to first narrow differences at summit

EU leaders on Friday will share their takes - online - on the €750bn recovery and €1.1 trillion budget plans, before they try to seal the deal at one or two likely head-to-head meetings in July.

Stakeholders' Highlights

  1. Nordic Council of MinistersNEW REPORT: Eight in ten people are concerned about climate change
  2. UNESDAHow reducing sugar and calories in soft drinks makes the healthier choice the easy choice
  3. Nordic Council of MinistersGreen energy to power Nordic start after Covid-19
  4. European Sustainable Energy WeekThis year’s EU Sustainable Energy Week (EUSEW) will be held digitally!
  5. Nordic Council of MinistersNordic states are fighting to protect gender equality during corona crisis
  6. UNESDACircularity works, let’s all give it a chance

Join EUobserver

Support quality EU news

Join us