The Eurogroup is reportedly seeking to reduce Greek debt payments by extending loans until beyond 2040 and reducing the interest rate to near 1%, well below the rate Greece would need to pay international investors. the Eurogroup meeting scheduled for upcoming Thursday is crucial for Greece as the country prepares to exit its third bailout program on August 21. will Greece’s euro partners agree on a debt relief?
Eurozone finance ministers are braced for a row this week with the Greek government over the terms of a “golden goodbye” as the country prepares to exit its third bailout programme, writes a Guardian report on the issue.
Concerns that Greece will suffer a fourth financial collapse unless an agreement is signed with the EU to write off some of its debt mountain are likely to surface before a showdown in Brussels on Thursday.
The International Monetary Fund, which has lent Greece several billion euros and has taken part in a tripartite monitoring of reforms with the European commission and European Central Bank (ECB), is expected to pull out of the arrangement unless Brussels reduces Greece’s debt burden.
Without the IMF on board, Germany and other hardline countries such as Finland and Austria could demand stricter clauses in the reform programme due to be imposed on Greece as the price of its final bailout payoff.
“Everyone has an interest to alleviating the burden, for Greece and the rest of the creditors,” said Olivier Bailly, the chief adviser to the EU’s finance commissioner, Pierre Moscovici. “If we leave too much burden, this will slow down Greece’s recovery.”
He played down the impact of the IMF pulling out of the first stage of surveillance that will last until at least 2022. “What is important is that the IMF give its view on debt measures. What the markets expect is that it says they are credible enough,” he said, admitting that the lack of involvement by the Washington-based lender of last resort puts pressure on Germany.
- Finance ministers from the 19-member currency bloc will meet on Thursday to agree a package of measures that will include a final loan payment of between €10bn and €12bn (£8.7bn and £10.5bn) and a cash buffer of up to €20bn. The payments are due to be the last of the €86bn bailout agreed in 2015.
The Eurogroup will demand it visit Athens every quarter instead of the usual six months. Thereafter, visits from the European commission will continue until Greece has paid back 75% of the €230bn it owes its eurozone creditors.
Hans Vijlbrief, the top EU official advising eurogroup ministers, said: “It’s very important that Greece can stand on its own feet. If it’s not credible, we won’t come out. This is the first condition.”
The Eurogroup is seeking to reduce Greek debt payments by extending loans until beyond 2040 and reducing the interest rate to near 1%, well below the rate Greece would need to pay international investors.
The IMF, however, has insisted that reducing the overall debt mountain from the outset is the only way to stabilise Athens’ public finances.
Vijlbrief said the EU charter prevented the Eurogroup from offering debt write-offs, but this assertion has never been tested and is still the basis for IMF involvement in the next stage of Greece’s recovery. full story the Guardian