Thursday

25th May 2017

Eurogroup makes 'progress' on Greek deal

  • "The whole agreement depends on all the pieces of the jigsaw puzzle," said Greek finance minister Tsakalotos. (Photo: eu2017mt/Flickr)

Eurozone finance ministers swapped Brussels' brand new Europa building for old Valletta's Grand Master's Palace, but they came out on Friday (7 April) with the usual optimistic line about Greece.

"We have achieved significant progress since the last meeting," Eurogroup president Jeroen Dijsselbloem said at a press conference after a meeting in Malta's capital.

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.

  • "The Greek people deserve the conclusion of the second review," said EU finance commissioner Moscovici (l). (Photo: eu2017mt/Flickr)

After months of delays and weeks of difficult talks, ministers endorsed an agreement between Greece and its creditors - the European Commission, the European Central Bank, the European Stability Mechanism, and the International Monetary Fund (IMF).

But the agreement will only allow experts from the creditor institutions to go back to Athens and try to reach a so-called staff-level agreement on reforms to be made by the Greek government.

The reforms are needed to conclude the second review of the bailout programme that was launched in 2015, and to allow the disbursement of a new tranche of financial aid.

In order to close the review, the Eurogroup will however need to agree on additional issues - Greece's fiscal targets for few first years following the end of the programme in 2018, and the sustainability of Greek debts.

"We have an agreement on the overarching elements of policy in terms of size, timing and sequencing of the reforms," Dijsselbloem said on Friday.

Reform package

He said that Greece and its creditors have agreed on the principle of a reform package, designed to cut spending by 2 percent of GDP.

One percent will come from cuts in the highest pensions by 2019 and the other percent will mainly come from an increase in the income tax threshold.

Details based on this agreement in principle will be discussed by the Greek government and the institutions' missions when it returns to Athens, most likely next week. A reform of the labour market is also still on the table.

To compensate for the effect of these austerity measures, the Greek government will be able to pass "expansionary measures" that would be implemented "on the assumption that the economy is doing better and the fiscal path is doing better than expected," Dijsselbloem explained.

Greek finance minister Euclid Tsakalotos told journalists that the measures will address social issues such as "child poverty, employment, housing, investment, or old age pensioners' contributions to medical costs".

The spending-cut reforms required by creditors and the measures requested by the Greek government to help people most hit by the crisis will be tabled at the same time in the Greek parliament, and will have to be adopted before the Eurogroup closes the review.

Helping Greece

"This is a balanced agreement," EU finance commissioner Pierre Moscovici said at the press conference, adding that it would "help Greece get on its feet again".

"The Greek people deserve the conclusion of the second review," he said.

What Dijsselbloem called the "final stretch" before a deal and the disbursement of the next loan is likely to be difficult.

Greece, its eurozone partners and the IMF will have to agree on the country's fiscal targets and future debt relief measures.

They need to decide how many years Greece will require to reach a budget primary surplus - the budget surplus before debt payments - of 3.5 percent of GDP after 2018.

The longer the target will be set - between three and five years, according to sources - the more Greece will have to maintain austerity measures.

The decision also has an impact on the sustainability of the Greek debt, with the IMF insisting that it cannot stay in the bailout programme if the debt is unsustainable.

Jigsaw puzzle

"The whole agreement depends on all the pieces of the jigsaw puzzle," noted Tsakalotos.

In a statement after Friday's Eurogroup, the Washington-based institution said that there were "good prospects for successfully concluding discussions on outstanding policy issues".

It added that its eurozone partners will have to come up with "satisfactory assurances on a credible strategy to restore debt sustainability" before it can decide whether or not it will stay in the programme.

The IMF says that the fiscal targets are too difficult to reach and that measures must be taken to reduce the weigh of the debt on the Greek economy. But the staunchest opponent of that position is Germany, which at the same time says that the bailout programme can only continue with the IMF.

"It is basically a discussion between Germany and the IMF," an EU official told EUobserver.

A diplomat from a member state, also implicitly referring to Germany and the IMF, noted that part of the delay in recent talks was because "some want to talk about the debt as late as possible".

All leaders in Malta pointed out that it was urgent to close the second review in order to dissipate uncertainties over the Greek economy, and also to avoid a crisis when Greece has to repay more than €7 billion in July.

"We need a deal very quickly," Tsakalotos insisted, adding that "very few actors want a new Greek crisis".

Greek bailout talks to 'intensify'

Greece and its creditors will meet in Brussels later this week to unblock negotiations needed for a new tranche of financial aid, amid concerns over the country's economic situation.

Greece and creditors break bailout deadlock

Athens agreed on budget cuts worth up to €3.6 billion and extracted some concessions from creditors, but the IMF warned the package might not be enough.

News in Brief

  1. Pressure grows on climate impact of EU timber harvesting
  2. US goes after Fiat Chrysler over emissions cheat
  3. Munich police break up Europe-wide burglar clan
  4. Report: VW threatened with €19.7 billion French fine
  5. Turkey begins mass trial of suspected coup leaders
  6. Merkel's CDU consolidates lead in polls
  7. France to host Russian president
  8. Switzerland votes against nuclear power

Stakeholders' Highlights

  1. UNICEFChild Alert on Myanmar: Fruits of Rapid Development yet to Reach Remote Regions
  2. Nordic Council of MinistersBecome an Explorer - 'Traces of Nordic' Seeking Storytellers Around the World
  3. Malta EU 2017Closer Cooperation and Reinforced Solidarity to Ensure Security of Gas Supply
  4. European Healthy Lifestyle AllianceHigh-Intensity Interval Training Is Therapeutic Option for Type 2 Diabetes
  5. Dialogue Platform"The West Must Help Turkey Return to a Democratic Path" a Call by Fethullah Gulen
  6. ILGA-EuropeRainbow Europe 2017 Is Live - Which Countries Are Leading on LGBTI Equality?
  7. Centre Maurits CoppietersWhen You Invest in a Refugee Woman You Help the Whole Community
  8. Eurogroup for AnimalsECJ Ruling: Member States Given No Say on Wildlife Protection In Trade
  9. European Heart NetworkCall for Urgent Adoption of EU-Wide Nutrient Profiles for Nutrition & Health Claims
  10. Counter BalanceInvestment Plan for Europe More Climate Friendly but European Parliament Shows Little Ambition
  11. Mission of China to the EUPresident Xi: China's Belt and Road Initiative Benefits People Around the World
  12. Malta EU 2017EU Strengthens Control of the Acquisition and Possession of Firearms

Latest News

  1. Openness over Brexit is 'political play', says EU ombudsman
  2. Le Pen's EU group in fresh spending scandal
  3. New EU right to data portability to cause headaches
  4. Cyber threats are inevitable, paralyzing impact is not
  5. Transparency complaints keep EU Ombudsman busy
  6. EU sets out criteria for relocating UK agencies
  7. EU states back bill against online hate speech
  8. Dutch coalition talks collapse again

Stakeholders' Highlights

  1. International Partnership for Human RightsThe Cost of Speaking Out: Human Rights Violations Committed in Belarus
  2. ACCABanishing Bias? Audit, Objectivity and the Value of Professional Scepticism
  3. Nordic Council of MinistersNew Oslo Climate Declaration Focuses on Rising Temperatures in the Arctic
  4. European Healthy Lifestyle AllianceAbdominal Obesity: A Causal Risk Factor for Cardiometabolic Diseases
  5. EU Green Week 2017Discuss EU Environmental Policies With Industry Experts and Thought Leaders
  6. GEN Summit 2017Join the World's Leading Media Summit for Thought-Provoking Talks and Experiences
  7. International Partnership for Human RightsTogether for Human Rights: A Year in Review
  8. Malta EU 2017EU All Set for Free Roaming Starting 15 June
  9. Nordic Council of MinistersRefugee Unemployment Biggest Drain on Public Purse, Says New Nordic Studies
  10. Dialogue Platform17,000 Women, 515 Babies in Turkish Prisons, a Report Reveals
  11. European Healthy Lifestyle AllianceCharlotte Hornets' Nicolas Batum Tells Kids to "Eat Well, Drink Well, Move!"
  12. ECR GroupSyed Kamall: We Need a New, More Honest Relationship With Turkey