Thursday

18th Jan 2018

Greek creditors in last-ditch attempt to agree pay-out

  • Stop the wishful thinking the IMF is telling the eurozone (Photo: EUobserver)

Eurozone finance ministers on Tuesday (20 November) are set for a final round of talks with the International Monetary Fund (IMF) about how to deal with Greece's ballooning debt.

The meeting is aimed at reconciling Greece's creditors after a similar gathering last week ended in public disagreement between IMF chief Christine Lagarde and the head of the Eurogroup of finance ministers, Jean Claude-Juncker, on giving Greece two more years to meet its debt target.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

A report by the troika of international lenders - the IMF, EU commission and European Central Bank - has been delayed for months as the creditors cannot agree whether Greece's debt - currently around 190 percent of GDP - will be able to shrink to 120 percent by 2020 as the bailout programme currently foresees.

The report is needed for ministers and national parliaments to formalise the disbursement of a €31.5 billion tranche, which the country had been expecting since June.

"The troika will update the Eurogroup tomorrow evening on Greece's compliance with its commitments. The European Commission is working flat out together with our partners in the troika to facilitate an agreement tomorrow at the Eurogroup," EU commission spokesman Simon O'Connor said in a press conference in Brussels.

Asked if the commission was in favour of moving the debt target from 2020 to 2022, O'Connor replied: "We need to find an agreement tomorrow on which all converge and which can ensure the sustainability of Greece's debt."

In Berlin, a spokeswoman for the finance ministry said that the main task of the meeting was to agree "on the current programme", which ends in 2014.

Governments taking losses on their Greek bonds, as Lagarde advocates, "continues to be out of the question," the spokeswoman said.

She also pointed out that a second meeting will be needed even if there is agreement on Tuesday. This is because the German parliament and other national legislatures have to formally approve the disbursement of the money before ministers may actually give the green light to the funds being transferred to Greece.

A provisional calendar, seen by Reuters news agency, envisages the money being transferred on 5 December. The pay-out would also be boosted to €44 billion to make up for the delay and the widening funding gap in Greek coffers. The new sum represents a reshuffling within the total of €130 billion agreed in March.

According to Bloomberg, a group of finance ministry officials from France, Germany, Italy and Spain met in Paris on Monday in a bid to iron out a deal ahead of the Eurogroup meeting. The German ministry of finance would neither confirm nor deny the information.

Parts of a compromise, according to officials in Berlin and Brussels, could be a lowering of the interest rate for the Greek loans. However, the rate could not go as low as zero, because that would amount to direct state financing, which is illegal under German and EU law.

Rolling over some debt deadlines and possibly some buy-back schemes via the European Central Bank are also envisaged.

Bailout 3.0 or second debt relief?

But none of these 'instruments' answer the fundamental question of how to fund Greece once the current bailout runs out in 2014.

A German board member of the ECB, Joerg Asmussen, over the weekend said that Greece will "obviously" not be able to finance itself once this programme runs out. "This means, a further programme will be needed," Asmussen told ZDF in an interview on Sunday. The issue is seen as total taboo in German politics, at least not before general elections in September-October next year.

Meanwhile, the head of the German central bank, Jens Weidmann, suggested that Greece's debt is simply too high and the recession too harsh for it to get back on track without further debt relief.

In March, when the €130 billion bailout was sealed, private creditors also agreed to slash half of Greece's debt, to the tune of another €100 billion.

But a second debt restructuring would mean losses for the eurozone governments and the ECB, as most Greek bonds are currently held by central banks, not by private ones.

To the IMF, this is the only way out. A credible solution for Greece should be "rooted in reality and not in wishful thinking," Lagarde warned ahead of the meeting.

Greece in limbo after bail-out talks fail

Eurozone finance ministers will reconvene next week after failing to reach a deal on whether to release the next tranche of Greece's multi-billion euro loan programme.

German coalition deal aims for 'Macron-lite' EU renewal

Merkel and Schulz clear the first hurdle of coalition talks, but the SPD's full membership backing is still needed. The likely coalition parties express support for Macron's eurozone reform ideas, but remain cautious.

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic Solutions for Sustainable Cities: New Grants Awarded for Branding Projects
  2. Mission of China to the EUTrade Between China, Belt and Road Countries up 15%
  3. Nordic Council of MinistersOresund Inspires Other EU Border Regions to Work Together to Generate Growth
  4. Mission of China to the EUTrade Between China, Belt and Road Countries up 15%
  5. AJC Transatlantic InstituteAJC Calls on EU to Sanction Iran’s Revolutionary Guards, Expel Ambassadors
  6. Dialogue PlatformRoundtable on "Political Islam, Civil Islam and The West" 31 January
  7. ILGA EuropeFreedom of Movement and Same-Sex Couples in Romania – Case Update!
  8. EU2017EEEstonia Completes First EU Presidency, Introduced New Topics to the Agenda
  9. Bio-Based IndustriesLeading the Transition Towards a Post-Petroleum Society
  10. ACCAWelcomes the Start of the New Bulgarian Presidency
  11. Mission of China to the EUPremier Li and President Tusk Stress Importance of Ties at ASEM Summit
  12. EU2017EEVAT on Electronic Commerce: New Rules Adopted

Latest News

  1. EU 'hypocrisy' condemns people to Libya, says NGO
  2. Next year's EU election at risk of Russian meddling
  3. Hungary to tax NGOs that 'help' migration
  4. Cyprus, Malta, and Russia gang up on whistleblower
  5. 'No backsliding' on Brexit promise, Irish PM warns
  6. Commission and council dig in on GMO opt-outs
  7. Ombudsman asks ECB chief to quit secret bankers group
  8. Polish Nazi-jibe MEP 'spams' EU inboxes

Stakeholders' Highlights

  1. European Jewish CongressChair of EU Parliament Working Group on Antisemitism Condemns Wave of Attacks
  2. Counter BalanceA New Study Challenges the Infrastructure Mega Corridors Agenda
  3. Dialogue PlatformThe Gülen Community: Who to Believe - Politicians or Actions?" by Thomas Michel
  4. Plastics Recyclers Europe65% Plastics Recycling Rate Attainable by 2025 New Study Shows
  5. European Heart NetworkCommissioner Andriukaitis' Address to EHN on the Occasion of Its 25th Anniversary
  6. ACCACFOs Risk Losing Relevance If They Do Not Embrace Technology
  7. UNICEFMake the Digital World Safer for Children & Increase Access for the Most Disadvantaged
  8. European Jewish CongressWelcomes Recognition of Jerusalem as the Capital of Israel and Calls on EU States to Follow Suit
  9. Mission of China to the EUChina and EU Boost Innovation Cooperation Under Horizon 2020
  10. European Gaming & Betting AssociationJuncker’s "Political" Commission Leaves Gambling Reforms to the Court
  11. AJC Transatlantic InstituteAJC Applauds U.S. Recognition of Jerusalem as Israel’s Capital City
  12. EU2017EEEU Telecom Ministers Reached an Agreement on the 5G Roadmap