Tuesday, February 24, 2015

Greece shows credentials and gets a financial short respite – Les Echos

Athens has had to fall back on some of its reform ambitions for the extension of the European rescue plan. Negotiations will continue to detail the Greek government program


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The first episode of the new season of the Greek drama is finally finished, pending further. Greece has obtained from its creditors on Tuesday the formal extension to the end of June of the aid plan that keeps it afloat financially. The finance ministers of the euro area – gathered for a special telephone Eurogroup – have given the green light, after validating the list of reforms that Athens has pledged to carry out in exchange. The Eurogroup agreed with the view of the European Commission, IMF and ECB – the former Troika we now call “institutions” – who believe that these measures are “a point of good start “ to lead to the disbursement of the last tranche of aid to 7 billion euros, not expected before the end of April. ” The Greeks are serious about reforms “, had out in the morning Jeroen Dijsselbloem, the Dutch Minister of Finance and President of the Eurogroup, as a good report.

A certain freedom of maneuver

To have this green light, Alexis Tsipras had to fall back on its ambitions. Greek Prime Minister had welcomed, this weekend, to find again some freedom of maneuver, since Greece had obtained the Eurogroup to formalize itself – instead of the Troika – the measures in return financial assistance. But this return to fiscal sovereignty is somewhat limited, given the measures chosen. It must be said that this list – sent in extremis before the deadline midnight Monday and “received 23 hours 15 in my mailbox” by Jeroen Dijsselbloem – was actually co-written by European partners Greece. “We insisted that the terms” cooperation “and coordination” be inserted around the document, in order to be certain that the Greek government will refrain from any unilateral action in the coming months “ said a European source. Several points in this list of six pages clearly bear the mark of the influence of creditors of Athens. First, one of the symbolic action of the campaign Alexis Tsipras has been significantly watered down: the increase in the minimum wage is raised, but the timing and amount have disappeared from the text. “Its realization is tightly controlled and subject to several conditions” , decrypts a European official. The Europeans have also obtained that the Greek government may not return on privatizations already carried out, nor those whose process began like the port of Piraeus. Third, the social measures promised by Syriza against “ the humanitarian crisis ” are cited, but reduced to a small paragraph and without a lot of details. Besides that, the Greek text lists a series of consensual and long overdue reforms by the troika, such as the fight against corruption, clientelism and tax evasion.

The Greeks did not completely capitulated

The Greeks, however, did not completely capitulated. Must first meet all he is not in the document, ie the new austerity measures were demanded the end of 2014 and which are not mentioned. Furthermore Alexis Tsipras remained vague on some points, including pension reform. This explains the caution expressed yesterday by Christine Lagarde, IMF chief, who called for more clear assurances on the continuation of reforms. “The commitments drawn by the authorities differ from existing commitments program in a number of areas” , outbid Mario Draghi, ECB president. So Greece has two months to give shape and substance to the list again and reassure creditors and European partners, stung by recent weeks.

A tight schedule until summer

The negotiating schedule will be very tight in the coming months to Athens, which should see its funding program extended until June Following the agreement on Tuesday
– By February 28. including the Bundestag must give the green light to the extension until June, the funding program Greece, which in theory happens to an end in late February.
– By the end of April: the list of reforms should be “refined and validated” with institutions (EU, ECB and IMF). This green light depends on the release of the money remaining in the program: 1.8 billion euros from the eurozone support fund, and $ 1.8 billion from the profits of the ECB on Greek bonds. To these we should logically add a tranche of the IMF (3.6 billions), which remains engaged with Greece until 2016.
– Current June: new Discussions will embark on the follow up to the funding program, which could take the form of a new aid plan for Greece, which has already benefited from two programs for a total of 240 billion euros. Athens needs: it must deal with important deadlines for repayment, a significant fiscal slippage, and the failing health of its banks due to heavy withdrawals in recent weeks.
– Late June: we “ask the question of debt,” said Sunday, the Greek Minister of Administrative Reform Giorgos Katrougalos. Athens wants an easing of these some 320 billion euros of debt, or about 175% of GDP
– 20 July and 20 August. Greece must repay nearly $ 7 billion ‘euros in debt to the ECB.



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