Eurozone ministers to discuss Greece, no decisions seen

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Eurozone finance ministers will hold a conference call today (31 October) to discuss progress in negotiations of the revised Greek bailout but are not expected to make any decisions yet, two eurozone officials said.

Representatives of the European Commission, the European Central Bank and the International Monetary Fund are in talks with the Greek government on reforms that Athens, cut off from market borrowing in 2010, has to implement to get emergency credit from the eurozone and IMF flowing again.

The three institutions, called the Troika, are also to prepare a report on Greek debt sustainability and ponder ways of finding additional financing if Greece were to reach a primary surplus of 4.5% of GDP in 2016 rather than 2014.

A Troika estimate presented to junior eurozone finance ministers last week showed that Greece would need an extra €30 billion to be financed over the two extra years.

"It will be just taking stock of the situation regarding the Greek assistance programme. There will be no decisions since there is no Troika report yet," one eurozone official with knowledge of the preparations for the mid-day teleconference said.

A deal on restarting the second bailout for Greece, stopped in June because the country was off track with reforms, hinges on the ruling coalition agreeing to labour market reforms.

One of the coalition parties, the Democratic Left, said it would vote against such reforms proposed by the Troika, ignoring the prime minister's appeal for a united front.

This leaves the government facing an unpredictable vote when they are presented in parliament next week, making it the fragile coalition's biggest test since taking power in June.

If Greece makes the reforms, international lenders will have to agree how to finance giving the country more time for fiscal adjustment and how to cut its debt mountain in a sustainable way below 120% of GDP from 150% in the second quarter.

"The Troika debt sustainability analysis is not ready yet, so decisions are more likely on November 8th or November 12th," a second eurozone official said referring to the next scheduled meetings of eurozone finance ministers - the Eurogroup.

But the ministers are also likely to touch on how to finance Greece and cut its debt. The second official said there were five options including lower interest on existing loans, extending their maturities, debt buy-backs and T-bill issuance.

Greece is behind debt reduction targets because its economy is in a much deeper recession than expected and because it is behind on plans to sell off state-owned assets and make reforms.

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