Wednesday

22nd May 2019

'Don't expect any deals' on Greece today

  • Dijsselbloem: 'perhaps we were too optimistic to think a complete reform of the pension system would be finished in a couple of months time' (Photo: Dutch Government/Valerie Kuypers)

Finance ministers of the eurozone are gathering in Amsterdam Friday (22 April) to hear about Greece's progress on reforms, and possibly start a debate on debt relief, a condition the International Monetary Fund has set for joining the country's third bailout package.

“I'm hearing good news from Athens, so let's see where we are,” Eurogroup president and Dutch finance minister Jeroen Dijsselbloem said on Friday morning.

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  • Eurozone ministers meet in Amsterdam's naval museum, with a view of a replica of an 18th century ship of the Dutch East India Company (Photo: Dutch Government/Valerie Kuypers)

“If we make progress on the content of the programme, and the next steps, then we need to start a discussion on debt. But we're only at he beginning of that discussion. So don't expect any deals today.”

Dijsselbloem referred to a promise made to Greece in 2012 that if it had carried out all reforms, it could get “if necessary” debt relief. However, in an interview broadcast Thursday evening on Dutch television, Dijsselbloem noted that absolution for any of Greece's debts was not the table.

Greece's lenders are working on a review of Greek reforms, which needs to be signed off before a new tranche of loans can be transferred to Athens. There is no formal deadline, although it was already expected last year.

Speaking to Dutch press on Friday, Dijsselbloem said that “perhaps we were too optimistic to think a complete reform of the pension system would be finished in a couple of months time” since the bailout package was agreed in August 2015. He added that such reforms in his own country usually also take a long time.

“Sometimes you apply some time pressure to get progress,” he added.

One sign of the "good news from Athens" the Eurogroup president mentioned came Thursday when the EU's statistical body Eurostat announced new budget figures.

It emerged that in 2015, the Greek government had slightly more revenue than spending, when interest on debt is left out of the equation. This figure is called a country's primary surplus.

According to Eurostat, Greece had a primary surplus of 0.7 percent of GDP in 2015, which European Commission spokeswoman Annika Breidthardt called “substantially better” than what was agreed.

Under the programme, Greece was not required to get a primary surplus yet last year, but was allowed a primary deficit of 0.25 percent. The 2016 target is a primary surplus of 0.5 percent.

But some are criticising Dijsselbloem and other European hardliners like Germany and Finland for sticking to “dogmas”.

Economist Paul De Grauwe, former advisor to the commission, told Dutch newspaper NRC Handelsblad this week Dijsselbloem “acts as if he has the moral high ground”, noting that both debtors and creditors have a responsibility.

De Grauwe said the risk of a Greek exit from the eurozone, or Grexit, is “as high” as 10 months ago.

EU commission chief Jean-Claude Juncker however disagrees with that notion.

He told Greek financial website euro2day.gr that those who are restarting the Grexit debate “are playing with fire”.

“I don’t think for one second that it would be wise and intelligent to restart this debate. Grexit did not happen and will not happen,” he said in an interview published Wednesday.

In his interview on Thursday, Dijsselbloem praised the Greek government, which “changed its attitude” since last Summer, when the Greek debt crisis was at its height.

“My summer holiday was very short last year. We have to try and prevent that this year," he said.

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