I need to strongly contemplate on this Eurogroup that ended at 6:30 Brussels times with a new date on May 24th. I need to read the long and unreadable official statement, Dijsselbloem’s and Tsakalotos’ statements, reactions coming from the Prime Ministry, and struggle my way through the Greek mainstream media … a difficult task at this time of the day. In order to understand my pain, please, read the comment below, by Peter Spiegel, who spent years as EU correspondent:
#Eurogroup language on #Greece contingency measures quite possibly most tortured paragraph in history of the crisis
Fact is that all Eurogroup participants are satisfied and that they have agreed on major issues of program review and the Debt Relief was discussed..
Based on statements or Tweets by several EZ finance ministers I read, I understand that the European lenders are not keen to have the IMF participate in the Greek program (3. bailout) as partner but rather in a role of providing monitoring and technical assistance.
They will all meet again on May 24th and take their decision then.
A short statement by the Eurogroup summarizes the results as follows:
The Eurogroup discussed the state of play of the first review of Greece’s macroeconomic adjustment programme.
It welcomed a package of policy reforms, which will cover:
- the pension system
- income tax and VAT
- public sector wage bill measures
- privatisation strategy
- the issue of non-performing loans
The Eurogroup concluded that further work was needed by the Greek authorities and the institutions on a mechanism regarding additional contingency measures. These measures will come into force only if additional effort is needed to reach the agreed primary surplus targets.
The conclusion of the first review will open the way for the disbursement of further financial assistance to Greece, following the implementation of prior actions by Greece and the relevant national procedures in the other euro area member states.
Next steps
The Eurogroup reaffirmed its readiness to consider, upon the conclusion of the first review, if necessary, possible additional measures to ensure sustainability of Greece’s refinancing needs. In this respect it agreed on general guiding principles and a sequenced approach, and tasked the Eurogroup Working Group to work on further details.
The Eurogroup will continue the discussion at its next meeting on 24 May 2016.
With regards to Privatization Fund, “the Eurogroup welcomes the agreement for the forthcoming adoption of the law establishing the agreed Greek Privatisation and Investment Fund, including an initial asset transfer, as part of the prior actions for the first review. The Supervisory Board of the Fund will be appointed by June 2016, and the Fund will become fully operational no later than September.”
I don’t quite understand why they had to establish a new privatization fund, but apparently Schaeuble knows better and it was his idea.
I also do not understand why Greece has to take austerity measures worth €5.4 billion in order to receive a bailout tranche of €5.5 billion.
The long detailed Eurogroup statement is here.
PS I may need to not contemplate at all, just wait for May 24th… I need to write about the Pension reform measures and the new taxation system anyway. But before all this, I’m going to watch something certainly pleasant and more airy like The Project Runway where young fashion designers compete around creative challenges
“The Eurogroup reaffirmed its readiness to consider, upon the conclusion of the first review, if necessary, possible additional measures to ensure sustainability of Greece’s refinancing needs. In this respect it agreed on general guiding principles and a sequenced approach, and tasked the Eurogroup Working Group to work on further details.”
As I said previously, we are redefining the meaning of the word “immediately” in Europe. Another way to have written the paragraph above would be: “The Eurogroup has decided that nothing needs to be done about Greece’s debt until later. Check back with us.”
How are we better off after this than what we were before this “successful” Eurogroup meeting?
No debt relief is forthcoming at least not in the near future and, unless you believe in unicorns and fairy tales, in the future period.
Fiscal measures remain at 3.5% despite the fact everyone agrees this figure is unattainable.
The IMF has gone nowhere, so they will still have to be satisfied (after the fiscal waterboarding of Greece, get ready for the structural waterboarding).
Greece has now created a mechanism whereby the Eurogroup doesn’t even have to ask for further measures to be passed by the Greek government in the future. They will now automatically kick in whenever the Eurogroup decides the Greek haven’t met certain conditions (with the Eurogroup deciding what these criteria are).
No wonder everyone is happy at the Eurogroup.
Tsipras is really a sap.
There’s a quick summary of the latest tax hikes on Greek Reporter.
If this doesn’t kill a depressed economy stone dead, I don’t know what will. GDP has already shrunk 22% since austerity and Greeks are spending two thirds of what they spent in 2010. Even spending on food is declining at a worrying rate, yet the VAT hikes are on staples like rice and pasta.
In fact, the whole chat about debt relief is rather irrelevant. The economy is shrinking so dramatically that the Debt/GDP ratio will only increase – as it has done since 2010.
They just want things to be quiet until after the Brexit vote. So they let Tsipras trumpet away about his “victory” without having conceded anything to him. After the vote, they will turn the screws again.
amid the cheers for the future, we should not forget the present which is 5.4 billion euro austerity starting retroactive 1.1.2016