Mario Draghi joined the club of those delaying return of Greece to the international markets. The European Central Bank will not consider including Greek government bonds in its asset purchases program before a pending bailout review is concluded and creditors agree to ease the country’s burden, Mario Draghi said on Monday.
Speaking at the European Parliament, Draghi said the European Central Bank will need to have its own Debt Sustainability Analysis.
“First, let’s have an agreement, a full agreement, and let’s find measures that will make the debt sustainable through time,” the ECB president told lawmakers on Monday at the European Parliament in Brussels. “We regret that a clear definition of the debt measures was not reached in the last Eurogroup.”
Draghi’s comments come after euro-area finance ministers failed last week to break an impasse on debt relief for Greece, delaying the completion of the country’s bailout review and the disbursement of fresh loans needed to repay obligations in July. A deal on debt would also pave the way for the ECB to consider including Greek bonds in its quantitative easing, thus facilitating the country’s access to bond markets — a key goal for the government in Athens, which is eager to show citizens and investors that the worst of the crisis is behind it.
“It is absolutely clear that our big ask is to be able to access the markets,” Greek Finance Minister Euclid Tsakalotos told reporters in Athens Monday. Greece’s inclusion in the central bank’s QE is a “difficult issue,” according to Tsakalotos as “the ECB, as our Lord, works in mysterious ways.”
“Greece’s inclusion in the ECB’s QE program would yield a major boost in terms of confidence and send a positive signal to investors,” Wolfango Piccoli, an analyst at Teneo Intelligence in London, said in an email. “QE is equally salient, if not more, on the political front as it would provide PM Tsipras with a much-needed ‘victory’ on the domestic front.” (full story Bloomberg)