The Eurogroup chief Jeroen Dijsselbloem and European Commissioner for Economic and Financial Affairs, Taxation and Customs Pierre Moscovici announced on Monday that the following Monday’s session in Brussels, the Eurozone Finance Ministers have agreed to grant Greece a two-month extension of its bailout program.
During the press conference it was announced that the troika’s technical teams on finances would return to Athens, with Mr. Moscovici pointing out that this is not an “official” return to Athens and added that “more ambitious” move may be necessary. Greece will formally request the two-month extension on Tuesday, which will be approved by the ESM Council.
A factual report on what Greece has so far completed will also be submitted by the troika. Additionally, the troika has proposed that the 11 billion euros available in the HFSF should remain available to Greece until the end of February. The Eurogroup is expected to approve this demand.
Finally, the debt sustainability analysis (DSA) has been postponed for two months “for practical reasons”, at the end of February. Any decision regarding the ECCL will be taken after the troika review and the current bailout program are successfully completed.
The Eurogroup’s statement on Greece:
The Eurogroup welcomes the recent positive macroeconomic developments in the Greek economy. The improving growth prospects for Greece reflect the remarkable adjustment efforts undertaken by the Greek citizens and authorities. The economic adjustment program is starting to pay off and is proving to be a cornerstone for Greece’s return to sustainable and balanced growth and job creation.
We also welcome the progress made by the Greek authorities in order to address the outstanding issues to conclude the fifth review, as assessed by the European Commission (EC), the ECB and the IMF. However, we take note that despite this recent progress, the current review can no longer be completed before the end of year. Therefore, the current review will need to continue into early 2015 until the staff-level agreement is reached and all prior actions are deemed to be fulfilled. This would pave the way for the disbursement of the outstanding €1.8 billion under the current EFSF program.
Therefore, the Eurogroup would be favorably disposed to a request by Greece for a 2-month technical extension of the current EFSF program. The Eurogroup asked the institutions to prepare a factual report on the state of play of the current review and gave a mandate to the EWG to report to member-states in order to launch the national procedures with a view to reach a final decision on the extension of the current EFSF Master Financial Facility Agreement by the EFSF Board of Directors by the end of the year.
Moreover, we were informed by the EC, the ECB and the IMF that it would be prudent to extend the availability period of the EFSF bonds in the HFSF buffer until the end of February 2015, in parallel to the extension of the EFSF program. The Eurogroup looks favorably at such an extension. Following a request by Greece, the EFSF can make the necessary arrangements before the end of the year.
The Eurogroup urges the Greek authorities to ensure a rapid and full implementation of all reform measures necessary to conclude the fifth review. These reforms are key for the Greek economy’s smooth functioning and will contribute to bringing about sustained growth and employment, and to secure the sustainability of public finances, thereby fully delivering on the program objectives.
Euro area member-states remain favorably disposed to granting Greece an ESM precautionary credit line (ECCL), if Greece were to request this, and subject to the finalization of the reform measures that are still pending under the current review, continued involvement of the IMF, and the completion of relevant national and EU procedures.
