17th Sep 2019

Six days for Greece to secure bail-out

  • No money without implementation, says Juncker (Photo: YoungJ523)

Eurozone finance ministers have given Greece six days to cough up another €325 million in spending cuts, pass the austerity program through parliament and give "strong" political guarantees it will stick after elections.

"Despite considerable progress in the last days, not all elements were on the table for us to agree today," eurogroup chief Jean-Claude Juncker said during a press conference at the end of the meeting in Brussels on Thursday (9 February).

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Several things need to happen for Athens for it to get the €130 billion rescue package and for private investors to write off a big chunk of its debt next Wednesday, he added: Greek MPs must pass the laws that implement the latest cuts and the €325 million funding gap must be "rapidly covered in order to ensure the deficit target is achieved."

EUobserver understands the gap still refers to supplementary pensions - Greek political parties were unable to agree on further cuts in this area earlier in the week.

The parties on Thursday morning agreed an extra €300 million cut for 2012. But could not pin down the final €325 million for 2013.

Juncker also noted that: "Strong political assurances from parties are needed for the smooth implementation of the programme after the upcoming general elections [in April] ... There will be no disbursement before implementation. We cannot go on with a system where promises are made and repeated and implementation measures are too weak."

The first EU bail-out, in 2010, saw reforms delayed for weeks as political promises evaporated.

Dutch minister Jan Kees also lectured Athens: "Greece still has homework to do, we are not there yet. That's why we gave them time until Wednesday, and the €325 million are part of the homework."

In addition, the EU will step up its presence in Athens to "monitor" the government.

EU economics commissioner Olli Rehn said ministers endorsed this move which is "in line" with laws on strengthened economic governance of the eurozone. He noted that this does not mean a commissioner to rule over Greece - as Germany had more-or-less suggested - but more experts in the EU commission's "task force" which will give advice and keep a close eye on privatisations, tax collection and spending of EU funds.

He added that ministers are giving "serious" consideration to the Franco-German idea of an escrow account for Greece because it could "ensure the implementation of the programme." Under the plan, the Greek government would not have access to the money, which would ensure part of the bail-out goes to pay back the lenders.

Meanwhile, Rehn's staff is preparing a new study on how large Greece's funding gap is compared to last October when the €130bn bail-out was agreed. Inofficial estimates currently speak of €15 extra billion that will have to be covered either by EU governments or private investors taking a higher haircut.

Another option for helping Greece - for the European Central Bank to give up its profits on €50 billion worth of Greek bonds - was not discussed on Thursday, EU sources said. But ECB chief Mario Draghi earlier that day signalled this may be done.

For his part, Greek finance minister Evangelos Venizelos said the ball is now in the court of the Greek political parties who have a "historic responsibility" to keep the country in the euro.

"If we see the future of our country within the euro zone, within Europe, we should do what we have to do for the programme to be approved and for the PSI to be concluded on time before major bonds expire in March."

With the coalition holding 252 out of 300 seats in parliament, the austerity bill is expected to pass in a vote on Sunday. But activists plan street protests and another strike at the weekend.

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