Sunday

4th Dec 2016

Germany praises Greece, but bail-out decision next week

German finance minister Wolfgang Schauble on Thursday (1 March) said Greece has made "tremendous efforts" to adopt all the reforms required for the new €130 billion bail-out. A final green light is expected next week.

"We saw based on the troika report today that Greece has made tremendous efforts and today we were able to take a step forward," Schauble told reporters on his way out of a meeting of eurozone finance ministers in Brussels.

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Ministers decided to give the eurozone bail-out fund - the temporary European Financial Stability Facility (EFSF) - a green light for guaranteeing bonds and recapitalising Greek banks as part of the ongoing bond swap operation with private bondholders aimed at slashing some €100 billion off Athens' debt by 8 March.

Following the completion of the bond swap, eurozone finance ministers will talk on the phone on 9 March and receive a "final assessment" of the implementation of reforms adopted in the early hours of Thursday, as some still had to be translated into English. "It's a long list of prior actions and we prefer to check twice," Schauble said.

But he insisted that everything was still within the planned timetable, with a positive final decision expected on 12 March when eurozone finance ministers meet in Brussels.

As for the increase of the eurozone firewall consisting of the EFSF and the upcoming €500 billion strong European Stability Mechanism - an issue which the International Monetary Fund has linked to its contribution to the second Greek bail-out - Germany has signalled willingness to look into it once the bond swap operation is finalised in Greece.

"Eurozone leaders confirmed their commitment to reassess the ESM-EFSF ceiling by the end of the month and accelerate payments into the ESM," EU council chief Herman Van Rompuy said in a press conference after the first day of the EU summit on Thursday. He added that the decision to boost the funds could be taken by finance ministers, meaning another summit of EU leaders would not be needed.

Even though the IMF board is meeting on 13 March, eurozone finance ministers are expected to receive the figure from the Washington-based lender in time for their meeting on Monday, enabling them to give the final green light to the bail-out.

Analysis

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Questions of value for money and a lack of transparency complicate adding almost €200 billion more and extending the Juncker investment plan to 2020.

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