Greece is “highly unlikely” to end its eurozone bailout programme without some new form of assistance that will require it to meet targets, a senior EU official said on Monday (3 November).
“A completely clean exit is highly unlikely,” the official told reporters, on condition of anonymity. “We will have to explore what other options there are. Whatever options we may be adopting, it will be a contractual relationship between the euro area institutions and the Greek authorities,” the official said.
The eurozone and IMF bailout support of €240 billion began in May 2010. Greece is in negotiation with EU institutions and the International Monetary Fund ahead of the expiry of its bailout package with the European Union on 31 December. Athens has said it wants its bailout to finish when EU funding stops, though the IMF is scheduled to stay through to early 2016.
The EU official said he expected eurozone ministers and Greece to decide on how best to help Athens at a meeting of finance ministers in Brussels on 8 December. That should give time for parliamentary approval before the December recess.
The official gave no details of what new aid might look like, but policymakers have said that the most likely tool is an Enhanced Conditions Credit Line, or ECCL, from the European Stability Mechanism.
That means Greece would be under detailed surveillance from the European Commission, the EU executive, for the duration of the credit line.
“There needs to be money available for drawing on,” the official said. “If you look at market volatility over recent weeks, one doesn’t need any further explanation of why a contractual arrangement makes sense.”
The official also said unused eurozone funds earmarked for bank recapitalisation in Greece could be used in a new credit line.
Greece has some €11 billion in a special fund that was set up to recapitalise Greek banks, but results of the European Central Bank Asset Quality Review and stress tests, released last week, showed that only a fraction of that sum will be needed.
“What is left over from the recapitalisation buffer could be used in such a programme or credit line,” the official said.
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.
- 8 Dec.: Eurozone finance ministers to meet in Brussels to discuss economic development in Greece.