Extraordinary Eurogroup Meeting on Greece via Teleconference, No 24/2012

Posted by in Economy

The finance minister of the eurozone countries are to meet at 5 p.m. today Saturday and hold an extraordinary session to discuss the next bailout tranche for Greece. The meeting will take place in the form of a video conference. Today’s meeting aims to settle a number of issues related to the Greek bailout like the sustainability of Greek debt, the possibility for Greece to buy its own bonds from the foreign investors. The Eurogroup is to meet again on  Monday, November 26th 2012, for the final decision. On Wednesday, a Eurogroup meeting failed to reach an agreement.

On the table is a mammoth loan tranche of total 44 billion euro consisting of three tranches that were supposed to be given to Greece in 2012 and were delayed for severla reasons, including the two rounds of elections. Athens anticipates the 31.5 billion euro due in 2Q 2012 to recapitalize its banks and pay outstanding debts to private suppliers. Leakages to the press claimed that the 31.5 billion euro would be given to Greece early December and the rest beginning of January 2013.

Greece but also its EU partners (Merkel, Jucker) are confident on the loan tranche disbursement.

While in Brussels in the context of EU Summit, Prime Minister Antonis Samaras told journalists he felt encouraged by the discussions he had in Brussels at the sidelines of the budget talks. “We have stopped hearing people saying it is just Greece’s fault,” he said. “We now have some strong supporters. The talks will go on right up to the last minute.”

Kathimerini has seen the data that eurozone finance ministers were studying during their meeting earlier this week and it suggests that regardless of any debt restructuring, Greece will continue to need 8.4 billion euros to cover its financing needs until 2016. It also pinpoints that there is a need to find another 10 billion euros in order to ensure Greek debt is at 124 percent of GDP in 2020 rather than 144 percent if no action at all is taken.

There are several proposals on the table in order to reduce Greece’s debt by 40 to 45 billion euros by 2020. The key element to this is a bond buyback scheme, whereby Athens will be lent about 9 billion euros to repurchase its own notes at an estimated 35 percent of their nominal value. This would lead to a debt reduction of about 18 billion euros.

A reduction of 0.9 percent on the interest rate on 53 billion euros in bilateral loans made to Greece as part of the first bailout would reduce the country’s debt by about 4 billion euros. The European Central Bank returning the gains it has made from buying Greek bonds on the secondary market would save about 5 billion euros. Another billion could be saved by the European Financial Stability Facility waving its fee on loans to Greece. (ekathimerini)