Sunday

29th Jan 2023

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.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

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.

Analysis

Why is petrostate UAE going all in on green hydrogen?

The United Arab Emirates announced its ambition to become one of the world's premier trading hubs for green hydrogen. Interesting, to say the least, for a country that relies on the sale of fossil fuels for its prosperity.

Analysis

Why is petrostate UAE going all in on green hydrogen?

The United Arab Emirates announced its ambition to become one of the world's premier trading hubs for green hydrogen. Interesting, to say the least, for a country that relies on the sale of fossil fuels for its prosperity.

Latest News

  1. Pressure mounts on EU to coordinate visas for Russian rights-defenders
  2. Dutch set to agree to US-led chip controls to China
  3. No record of Latvian MEP's 'official' Azerbaijan trip
  4. Why the new ECHR Ukraine-Russia ruling matters
  5. Europe continues to finance Russia's war in Ukraine with lucrative fossil fuel trades
  6. Official: EU parliament's weak internal rule-making body leads to 'culture of impunity'
  7. Red tape border logjam for EU's 1.3m 'frontier workers'
  8. Greece's spy scandal must shake us out of complacency

Stakeholders' Highlights

  1. European Parliamentary Forum for Sexual & Reproductive Rights (EPF)Launch of the EPF Contraception Policy Atlas Europe 2023. 8th February. Register now.
  2. Europan Patent OfficeHydrogen patents for a clean energy future: A global trend analysis of innovation along hydrogen value chains
  3. Forum EuropeConnecting the World from the Skies calls for global cooperation in NTN rollout
  4. EFBWWCouncil issues disappointing position ignoring the threats posed by asbestos
  5. Nordic Council of MinistersLarge Nordic youth delegation at COP15 biodiversity summit in Montreal
  6. Nordic Council of MinistersCOP27: Food systems transformation for climate action

Stakeholders' Highlights

  1. Nordic Council of MinistersThe Nordic Region and the African Union urge the COP27 to talk about gender equality
  2. Friedrich Naumann Foundation European DialogueGender x Geopolitics: Shaping an Inclusive Foreign Security Policy for Europe
  3. Obama FoundationThe Obama Foundation Opens Applications for its Leaders Program in Europe
  4. EFBWW – EFBH – FETBBA lot more needs to be done to better protect construction workers from asbestos
  5. European Committee of the RegionsRe-Watch EURegions Week 2022
  6. UNESDA - Soft Drinks EuropeCall for EU action – SMEs in the beverage industry call for fairer access to recycled material

Join EUobserver

Support quality EU news

Join us