Friday

28th Apr 2017

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.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

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.

Eurogroup makes 'progress' on Greek deal

Eurozone ministers endorsed an agreement in principle between the Greek government and its creditors over a new package of reforms. But talks on fiscal targets and debt could still block a final agreement.

New anti-trust complaint looms over Microsoft

At least three security software companies “met several times” with the European Commission to complain about Microsoft’s alleged abuse of its market position. A formal case could follow.

Commission stops German-British stock merger

The decision to block the merger of the London Stock Exchange and Deutsche Boerse was expected, as negotiations between the parties broke down a few weeks ago.

SMEs lack support in EU financial plan

The European Commission's plan for a capital markets union is said to be aimed at small and medium-sized enterprises, but many could end up being left out in the cold.

New anti-trust complaint looms over Microsoft

At least three security software companies “met several times” with the European Commission to complain about Microsoft’s alleged abuse of its market position. A formal case could follow.

Investigation

MEPs oppose EU agency to prevent Dieselgate II

The European Parliament said on Tuesday that there should be more EU oversight on how cars are approved, but stopped short of calling for an independent EU agency.

News in Brief

  1. Vote of no confidence prepared against Spanish PM
  2. Syria to buy Russian anti-missile system
  3. Germany seeks partial burka ban
  4. Libya has no plan to stop migration flows
  5. EU has no evidence of NGO-smuggler collusion in Libya
  6. Poland gets 'final warning' on logging in ancient forest
  7. Commission gives Italy final warning on air pollution
  8. Romania and Slovenia taken to court over environment policies

Stakeholders' Highlights

  1. ECR GroupSyed Kamall: We Need a New, More Honest Relationship With Turkey
  2. Counter BalanceParliament Sends Strong Signal to the EIB: Time to Act on Climate Change
  3. ACCARisks and Opportunities of Blockchain and Shared Ledgers Technologies in Financial Services
  4. UNICEFRace Against Time to Save Millions of Lives in Yemen
  5. Nordic Council of MinistersDeveloping Independent Russian-Language Media in the Baltic Countries
  6. Swedish EnterprisesReform of the European Electricity Market: Lessons from the Nordics, Brussels 2 May
  7. Malta EU 2017Green Light Given for New EU Regulation to Bolster External Border Checks
  8. Counter BalanceCall for EU Commission to Withdraw Support of Trans-Adriatic Pipeline
  9. ACCAEconomic Confidence at Highest Since 2015
  10. European Federation of Allergy and Airways60%-90% of Your Life Is Spent Indoors. How Does Poor Indoor Air Quality Affect You?
  11. European Gaming and Betting AssociationCJEU Confirms Obligation for a Transparent Licensing Process
  12. Nordic Council of MinistersNordic Region and the US: A Time of Warlike Rhetoric and Militarisation?