The extraordinary meeting of the Eurogroup, scheduled for July 3rd will not take place with the physical presence of the Eurozone Finance Ministers but it will be replaced by a teleconference. According to Greek economic news portal Capital.gr, Guy Schuller, spokesman of Eurozone Chief Jean-Claude Juncker, said that “The meeting will be held per teleconference on Saturday afternoon, while he stresses that it has not been decided yet whether there will be an official statement after the meeting.
On Wednesday, Greek government managed to pass the Mid-Term Austerity Programme through the parliament with a thin majority of 155:300 votes and a storm of tears gas and excessive police violence against anti-austerity protesters. On Thursday, the Implementation Law was adopted in the parliament with 155 votes. The two votes were ordered by Greece’s lenders EU and IMF as a precondition for the release of the 5th tranche of the €110 billion bailout. Greece claims it will run out of money on July 15, 2011 and will be unable to pay wages and pensions. Most important, to pay the interest rates to its lenders.
I bet the over next Eurogroup meeting will be held on Twitter! Next trancche will be tranfered per Paypal account! The guys may need also a webinar on economics and democracy…
The Eurogroup Meeting is decisive for Greece as it will be decided whether the 5th tranche will be released. Rombay and Barroso seemed confident on Thursday. Read below, the why the meeting is decisive:
“International lenders made it clear with statements that nothing should be taken for granted regarding the release of the fifth aid tranche, the new loan and the growth package. The first meeting is scheduled on Sunday at an extraordinary meeting of Eurogroup, while a week late a new meeting will be held.
*The main objective is to achieve the on-time release of the next €12b next installment. Although IMF and EU statements after the adoption of the bills were positive, but the decisions should be finalized, as the IMF cannot pay its slice if the liquidity of a state is not ensured for the next 12 months.
*The issue of the new loan is not certain, international officials note, adding that it would be finalize on Sunday, largely depending on the deal of the private participation.
If technical details are not finalized on Sunday, then the positive scenario is to postpone decisions for the next Eurogroup meeting on July 11. The negative scenario is the postponement of decisions for autumn, as it would give time to international lenders to prepare for a potential Greek default.
Regarding the issue of private participation on a voluntary basis, the President of ECB Jean-Claude Trichet made it clear that the ECB won’t participate in rollover of Greek debt as it is a project involving the private sector, not sovereign.
Thus, the focus is on the French proposal, which has the support of major German banks and insurance funds. It is unclear what proportion of bonds mature will be included in the rollover.
The negotiations are not over yet, and officials note that the progress has been rapid recently. But sources note that the borrowing costs could reach 8%.
*The third part of negotiations is the growth package. On Thursday, Prime Minister Giorgos Papandreou sent a letter to the President of European Commission Jose Barroso, calling for acceleration of financing to Greece though the National Strategic Reference Framework and the suspension of the national contribution. The amount to be saved is not large, while it would cause the reduction of total investments. So, Greece is hoping to an additional support package for the real economy, which several EU executives called new Marshall Plan.”
(source: Capital.gr )