A mission of international lenders will return to Greece later this week to review progress made in delivering on the country's reforms that are key for further loans, the chairman of eurozone finance ministers, Jeroen Dijsselbloem, said yesterday (17 February).
Debt-laden Greece may have achieved a better than expected fiscal outcome last year and might meet the conditions for further disbursements from international lenders in March, senior eurozone officials said on the sidelines of a meeting of the eurozone finance ministers.
In a separate statement, the IMF said that discussions with Athens would start on 24 February.
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 after being cut off from markets because of unsustainable public finances.
The international lenders 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.
No progress on reform means no new money for Greece.
The last review was supposed to be completed in September 2013, but has been dragging on until now because Athens had not reached the goals set out in its agreement with the Troika.
Speaking to reporters after a meeting of eurozone finance ministers where Greece was discussed, Dijsselbloem and EU Economic and Monetary Affairs Commissioner Olli Rehn said the Troika would return to Athens later this week.
This was a sign that completing the review was possible in March, Rehn said, paving the way for the disbursement of the next tranche that Greece needs to pay for bonds maturing in May.
"I believe that if everybody does their part, we will be able to conclude a staff level agreement in March, which would be very important for Greece and for the Greek economy, for the Greek people," Rehn said.
Once the review is done, Greece and euro zone ministers will move on to discuss if Athens has sufficient funds to stay fully financed in 2014 and 2015 – a condition for the IMF to continue lending to Greece alongside the euro zone bailout fund.
The ministers will also discuss if they should offer any further debt relief to Greece given the country reached a primary surplus last year – a condition set by the euro zone back in November 2012 for any further help on debt.
Greece said on Saturday that the primary budget surplus for 2013, which excludes interest payments and other one-off items, has come in at over €1.5 billion euros, much higher than initial estimates and targets set by the Troika.
Rehn cautiously acknowledged the surplus could be a positive surprise.
"On the fiscal side it appears that the outcome for the last year may be better than expected, although we must reserve our final judgement until Eurostat publishes its validated data on 23 April," he said.
A serious discussion on any debt relief for Greece, which can take the form of a reduction of interest on existing loans and an extension of maturities, would only take place in the second half of 2014, Dijsselbloem said.
Recovery in EU ‘subdued and modest’
Rehn said that latest data showed that the economic recovery was gradually gathering strength in Europe. Quarterly growth reached 0.4% in the EU, which is slightly above our autumn economic forecast, and 0.3% in the euro area, also slightly above the Commission’s autumn forecast, he said.
“The euro area economy is now on track for the expected acceleration this year and next, 2014 and 2015. But the recovery remains subdued and modest, mainly because of the legacy of the financial crisis, and economic recession continues to hold back GDP growth”, Rehn said.
On 6 February, Greek finance minister Yannis Stournaras attacked the Troika for its austerity prescriptions, saying a primary budget surplus will be announced soon and will be much larger than expected [more].
Stournaras slammed Greece‘s international lenders for the forecasts they made from September 2013. At that time, the Troika asked for additional austerity measures to the tune of €3 billion.
Four years after the start of Europe's debt crisis, the economic and financial committee of the European Parliament has opened an investigation into the role of the Troika – made up of the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF) – in the debt crisis.
The Parliament probe aims to shed light over the Troika’s handling of the crisis, with a view to strengthening its democratic legitimacy and the involvement of the European Parliament in its work.
>> Read more: Parliament seeks tougher controls on Troika
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