Eurozone finance ministers agreed yesterday (3 July) to release €1billion in bailout loans to Greece in a conference call ahead of Monday’s Eurogroup meeting in Brussels.
The €1 billion is part of a €8.3 billion loan from the European Financial Stability Facility to help the debt strapped country. Its release was on condition Greece met six commitments.
The EFSF must rubberstamp the funds release, which should happen later this week, an EU official said. Monday’s meeting will make yesterday’s decision official. Eurozone nations hold more than 80% of Greece’s €319 billion public debt.
€6.3 billion was released at the end of April. The final €1 billion is dependent on a second set of milestones. Greek diplomats assured the ministers they would be met by the end of this month.
Once that happens, the fifth review of Greece’s bailout plan will begin. A team of experts is travelling to Greece next week to prepare the groundwork for the review.
The review, which will spark negotiations over the next bailout terms and conditions, is expected to start in September, an EU official said.
The time it takes would impact on discussions over new debt relief measures for Greece, which has just finished its term holding the six-month rotating presidency of the EU.
The conditions met related to the adoption of outdoor trading measures and those relating to investment licensing law and planning law. A list of nuisance charges was created with a website for consumers to draw attention to them. A government code of conduct was created.
A memorandum of understanding was signed implementing debt reduction into tax administration and measures against the mark-ups of pharmaceuticals sold in Greece were also brought in.
In April, European officials confirmed that Greece will obtain more debt relief from its international lenders after meeting fiscal targets and achieving a budget surplus.
The surplus of €1.5 billion is the first since 2002 and came a year ahead of schedule. Greece also returned to the bond market, ending a four-year exile from financial markets.
Country by country recommendations
Monday’s meeting will also discuss the EU’s country by country recommendations to strengthen economic growth and stability.
11 of the 18 countries have recommendations to fulfill as part of the Stability and Growth Pact. The pact is an agreement to coordinate financial policy in the EU.
The dominant theme of discussion will be how to shift taxes away from labour to increase employment.
The pact’s targets must still be respected, said an EU official, who pointed out that taxes were raised across the board to aid fiscal consolidation.
Italian prime minister Matteo Renzi, whose country has taken over the EU’s rotating policy, has called for the pact to be changed.
Spain’s finance minister Luis de Guindos is expected to outline recent tax reform measures in his country, EU officials said. Other ministers will describe the national debates and concerns over how and what to shift the tax burden from labour to.
Ministers will also hear from the Chairman of the Supervisory Board of the Single Supervisory Mechanism about the upcoming bank stress tests and progress made on evaluating the asset quality of banks. The Single Supervisory Mechanism is the central overseer of euro area banks.
The Eurogroup is a meeting of eurozone finance ministers. It meets in private the day before the ECOFIN, the meeting of all the EU finance ministers.
Greece, with a debt-to-GDP ratio of around 175% of GDP, has been bailed out twice since 2010 by other eurozone governments and the International Monetary Fund (IMF) after being cut off from markets because of unsustainable public finances.
Officials from the IMF, the Commission and the European Central Bank, called the Troika, review every three months Greece's progress in putting its finances in order and reforming its economy in exchange for the loans, which are disbursed in tranches.
- 7 July: Eurogroup meeting
- 8 July: ECOFIN meeting