Wednesday

22nd Aug 2018

EU to drip-feed Greek treasury

  • Greek finance minister Euclid Tsakalotos (r) with European Stability Mechanism chief Klaus Regling (l). Since the start of the programme last year, Greece has received €28 billion.

Eurozone finance ministers gave their green light on Monday (10 October) to the disbursement of a €1.1-billion tranche of aid to Greece, but said they would wait before releasing another €1.7 billion.

Ministers meeting in Luxembourg took the decision after the European Commission said it considered that the Greek government had fulfilled all 15 requirements to close the so-called first review of the bailout programme launched last year.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

They said that they would wait until the publication of the latest data on clearance of net arrears, due later this month, before authorising the release of the €1.7-billion sub-tranche of aid.

"Greece has made a tremendous job to complete the milestones of the first review,” EU finance commissioner Pierre Moscovici said.

The EU commission's assessment of the latest legislation passed in Athens last week was completed at the last minute, a few hours before the Eurogroup meeting.

The decision to release the €2.8 billion come after a €7.5 billion tranche in June and will in effect close the first review of the programme, almost a year after it had been expected to be closed.

Since the start of the programme in August last year, Greece has received €28.9 billion.

For the review to be completed, Greece had to pass legislations on various areas such as pension cuts, VAT rise, income tax reform, privatisations, reform of the energy sector, repayment of arrears, the recapitalisation and governance of banks, or foreclosures for owners who have failed to repay their loans.

Moscovici said that the measures amounted to savings worth 3-percent of GDP for the period 2016-2018.

The work is "not always simple, not always spontaneous", he noted, but he assured that Greece and its creditors were "building a success story".

The second review, which should start in the coming weeks and will lead to another tranche of aid, will be "more about implementation [of the measures already taken] that hard legislation", the commissioner said.

EU officials expect it to go more smoothly than the first and to be completed before the end of the year.

But all parties in the programme know that there is an elephant in the room: debt relief.



The IMF, which was part of the two first bailouts of 2010 and 2012, is not formally part of the third one. It said it would take a decision before the end of the year, based on whether it considers that Greek debt is sustainable.

Debt relief

The Washington-based institution and EU creditors reached an agreement in May on short and mid-term debt relief, which the president of the Eurogroup, Dutch finance minister Jeroen Dijsselbloem says remains valid.

"I'm not going to open the debt discussion every month. Some are eager to do so, I'm not," he said in Luxembourg.

But on Sunday, the Reuters news agency said that the IMF would not join the programme and would take instead a special advisory status.


The IMF maintains that measures are needed to make the long-term Greek debt sustainable. Others, mainly Germany, have ruled it but says the fund should stay on board.

Other parties say that new talks, which look inevitable, will amount to "squaring the circle" between the fund and Germany.

Growth problem

For some of them, Greece's main problem is not debt but the lack of reforms in the past and of investment now to sustain lasting growth.

"The debt is not sustainable, but it is not a question of percentage [of the GDP], it is a question of growth," a diplomat told EUobserver, pointing out that Greece's competitiveness has plummeted again in the latest World Economic Forum's ranking published at the end of September.

In Luxembourg, both Dijsselbloem and Moscovici pointed out that the Greek economy recorded three consecutive quarters of growth.



But for the diplomat, the figures are deceptive because with weak foreign investment and exports Greece's economy has little reserve for a productive growth and not a catching-up growth.

EU and IMF agree debt relief for Greece

Greece's creditors will take measures to reduce the cost of debt repayment and for the first time say debt could be reduced in the future. They also decided a €10-billion new loan.

Opinion

Europe ready to tackle Greek debt relief

The Greek government has built and broadened alliances in EU institutions and member-states that acknowledge the need to restructure the debt and deliver another economic model for the eurozone.

News in Brief

  1. EU Commission: efforts 'ongoing' over Italian migrant ship
  2. Italy allows boat with migrants to dock
  3. France's Total pulls out of Iran due to US sanctions
  4. Trump accuses EU and China of currency manipulation
  5. Swedish conservatives regret unsuccessful integration policies
  6. Record high measles cases hit Europe
  7. Swedish politician declares war on media
  8. Italy threatens to return migrants to Libya

Opinion

Has the time finally come for 'European champions'?

Since Emmanuel Macron took the French presidency in 2017, the concept of consolidating European industries to create continental 'champions', capable of competing on a global scale, has been revived.

EU 'tax lady' hits Google with record fine

Margrethe Vestager has fined the US tech giant with €4.34bn for abusing its market dominance in mobile operating systems - but assured US president Donald Trump that it is not because she does not like America.

Stakeholders' Highlights

  1. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  2. IPHRCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  3. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  4. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  5. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  6. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  7. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  8. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  9. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  10. Mission of China to the EUChina: Work Together for a Better Globalisation
  11. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  12. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma

Latest News

  1. 'Final phase' Brexit talks to go on 'continuously'
  2. UK sanctions appeal risks highlighting EU divisions
  3. Wind delays launch of European wind-mapping satellite
  4. Greece 'normal' again after end of crisis, EU says
  5. Putin strikes blow against Russia's isolation by Europe
  6. EU-China cooperation on CO2 storage lost in limbo
  7. Greece exits bailouts, but difficult path ahead
  8. EU gets record response on 'summertime' consultation

Stakeholders' Highlights

  1. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  2. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network
  3. Mission of China to the EUChina-EU Economic and Trade Relations Enjoy a Bright Future
  4. ACCAEmpowering Businesses to Engage with Sustainable Finance and the SDGs
  5. Nordic Council of MinistersCooperation in Nordic Electricity Market Considered World Class Model
  6. FIFAGreen Stadiums at the 2018 Fifa World Cup
  7. Mission of China to the EUChina and EU Work Together to Promote Sustainable Development
  8. Counter BalanceEuropean Ombudsman Requests More Lending Transparency from European Investment Bank
  9. FIFARecycling at the FIFA World Cup in Russia
  10. Nordic Council of MinistersOECD Report: Gender Equality Boosts GDP Growth in Nordic Region
  11. Centre Maurits Coppieters“Peace and Reconciliation Is a Process That Takes Decades” Dr. Anthony Soares on #Brexit and Northern Ireland
  12. Mission of China to the EUMEPs Positive on China’s New Measures of Opening Up

Join EUobserver

Support quality EU news

Join us