Euro zone finance ministers opened discussions on debt relief for Greece on Monday, but pushed forward a final decision until later this month as Greece inched closer to finishing the first review of its bailout programme six months after it was initially scheduled.
Euro-group chairman Jeroen Dijsselbloem told reporters officials had now been tasked with exploring three options for debt relief for Greece.
The first would look at short- term debt management options; the second would examine specific measures such as grace periods for debt repayments that would kick in at the end of the Greek bailout in 2018; while the third, longer- term perspective would consider whether, at the end of the bailout, further debt management will be needed to address Greece’s long-term debt sustainability in future decades. The weighted average of the maturity of Greece’s debts is 32 years.
“Today was about opening the debate, exploring options, and giving political guidance to the technical people to begin,” Mr Dijsselbloem said, adding a deal was expected to be reached at the next scheduled euro group meeting on May 24th.
Earlier, Minister for Finance Michael Noonan had said that Ireland would support debt relief measures for Greece, but not a nominal debt writedown.
But while the IMF and the Greek government are likely to welcome the commitment to consider debt relief for Greece, more controversially euro- group ministers yesterday reiterated their call for further contingency measures from Greece that would be implemented if the country missed its annual budget targets.
The idea of the extra contingency package emerged last month as a way of bridging a deep divide between the IMF and Greece’s European lenders over growth projections for Greece. While the European Commission says Greece will deliver a primary surplus of 3.5 per cent by 2018, the IMF believes current measures will yield a surplus of just 1.5 per cent.
Mr Dijsselbloem said that the contingency measures must be “legislated up-front” but the Greek government has warned about the difficulties involved in pushing further austerity measures through parliament.
On Sunday night, the parliament passed contentious measures including cuts to pensions and an increase in personal income tax that were required under the first review. It followed three days of strikes in Greece and demonstrations in Athens.
Asked if he was confident the Greek government would be able to implement the contingency measures, Mr Dijsselbloem said Greece’s euro-zone lenders were now demanding the government legislate for the contingency mechanism, but not for specific measures, a concession that would make it easier legally for Greece to implement the package.
Third bailout
Premier Alexis Tsipras’ party, with his coalition partner, controls 153 seats of Greece’s 300- strong parliament. The 41- year-old premier was elected in January 2015 on an anti-austerity mandate, but was forced to sign up to a third bailout for his country last summer following months of bitter negotiations.
While the first review of the third programme had initially been scheduled to conclude last October it still remains unfinished as talks between creditors and negotiators in Athens have hit delays.
EU commissioner Pierre Moscovici said yesterday he was confident the first review could finally conclude this week following the passing of further reforms in the Greek parliament on Sunday. Klaus Regling, the head of the ESM fund that manages Greek's loans on behalf of euro zone member states, said a number of debt-reduction measures were now being considered for Greece. But he added that significant debt reduction measures had already been granted to the bailout country.
