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‘Austerity Bill Not Enough for Bailout Tranche’, Say German FinMin & EU Commission

The austerity package that will bring financial disaster to millions of Greek households was apparently not enough for Greece’s lenders to give the green light for the release of the 31 billion euro bailout tranche. Of course, the budget 2013 has to be adopted by the Greek Parliament, as well. That is another precondition for the tranche, and despite the political casualties Greece’s coalition government suffered on Wednesday night after the austerity bill voting, the budget is expeted to be adopted on Sunday night. However, also this crucial vote is not enough.

Two crucial votes are not enough?  No, they are not.

Before the country’s lenders bless the 31 billion euro, two more things have to be fixed: a) the country’s debt sustainability and b) its financing needs, should PM Samaras manages to achieve a two-year extension of the bailout program. That is an additional cost of estimated 30 billion euro until 2016. Greece’s creditors have to agree on who will come up for this extra amount.  

Simon O’ Connor, spokesmann of EU Commissioner for economic and monetary affairs, made this clear on Thursday, despite previous accertainments claiming otherwise:

“Simon O’Connor had previously said that Mr. Rehn was hopeful for a decision on giving Greece a long-held tranche of EUR31.5 billion in aid on Nov. 12, when euro-zone finance ministers will meet here in Brussels to discuss the situation in the country.

But on Thursday, Mr. O’Connor said that “beyond these votes on the fiscal and structural conditionality there are these other two key aspects on which an agremeent also needs to be reached,” referring to a troika agreement on debt sustainability and financing.” (WSJ)

EU Commission statement came just hours after German Finance Minister Wolfgang Schaeuble cut the wings of Greeks telling them not to expect a bailout decision on November 12th at the Eurogroup meeting.

“Next week may still be too early to make a decision on granting further aid to Greece, German Finance Minister Wolfgang Schaeuble said on Thursday.

“We are not out of the woods with Greece yet,” Schaeuble told an economics forum in the northern port of Hamburg.

“At the moment I do not see how we can come to a decision on Greece and with Greece at the end of next week, it would be too early,” he said according to Reuters.

The tranche was originally schedulled to be given to Greece last August. PM Samaras has said that the country has money until November 16th.
After hearing Samaras’ speech last night, I assume that he would send finance Minister Stournaras to Eurogroup meeting next week with a well-thought and down to last detail worked out Plan to reach the needed agreement. Or not?

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