The Greek Minister of Finance, Gikas Jardúvelis, explained to his colleagues “what the government thinks” to do after the end of the European macroeconomic adjustment program on January 1, according to the president of the Eurogroup, Jeroen Dijsselbloem.
After his presentation, the ministers concluded that “our positions are clearly converging,” Dijsselbloem explained at the press conference following the meeting of the Eighth Ministers of Economy and Finance.
“Taking into account the still fragile situation of the markets and the many reform challenges that still lie ahead, there is broad support for a preventive credit line in the form of a credit line with reinforced conditions”, of the European Mechanism of Stability (ESM), said the president of the Eurogroup.
Dijsselbloem said that today there has been only a preliminary preliminary conversation on this issue and that now “we will discover and work more on the conditions that will be linked” to this line of credit with reinforced conditions, he explained.
The Dutch finance minister also said that, in addition, there is a “broad understanding” in the Eurogroup that the “International Monetary Fund (IMF) must be involved”.
“More discussions are needed on the exact involvement” of the IMF, he said, whose part of the Greek bailout ends, in principle, at the end of the first quarter of 2016.
The amount of the credit line “will have to be designed based on the final analysis of the current” second rescue, which, added to the first, has meant 172,600 million euros, as well as the number of conditions that Greece would have to comply with.
Greece would be subject to supervision, as it is now, by the troika. The European Commissioner for Economic and Financial Affairs, Pierre Moscovi, said that “we are looking for solutions to allow the Greeks to approve the necessary reforms and contribute to the integrity of the eurozone and in that Greece should participate.” “We are willing to consider a line of credit,” said the former French minister.
“Everyone agrees that we should stop managing Greece in detail (…) but at the same time will need help from the European Union (EU) and the EU will be ready to help,” he said.
Dijsselbloem stressed that, while working on the technical details of the credit line for Greece as of January 1, 2015, it is crucial that the current rescue review mission carried out by the triad of international creditors – the EC, the ECB and the IMF- be finalized.
Greece has presented the troika with a “package of additional measures”, but “while this is an important progress, more is needed”, explained the president of the Eurogroup.
The troika wants to resume the fifth review mission “as soon as possible”, he stressed, in order to close the pending issues soon.
“Closing the current mission is of course an important precondition for talks on any subsequent settlement” to the Greek rescue from January, he stressed.
For Dijsselbloem “it is crucial that there is a signal that we can support Greece” and that “it is important that there is no gap there” between the end of the program and the solution agreed upon, he insisted.
Moscovici explained that the idea is that the triad of international creditors “return before the end of next week” to Athens to prepare the decisions that have to be made before December 8.
The European Commissioner will visit before that day Athens and also Nicosia on his first official trip, he stressed.
Precisely, the Eurogroup today approved a new disbursement of the rescue to Cyprus worth 350 million euros, but conditioned the payment to the country does not postpone the implementation of legislation on foreclosures.
In a credit line with reinforced conditions Greece will be forced to take corrective measures with the aim of facing weaknesses and avoiding any future problems regarding its access to market financing.
The weaknesses refer to the inability of the country to maintain its public debt sustainable or to respect the commitments assumed in an excessive deficit procedure, according to an ESM document.
Also if it does not maintain a “good track record” on its ability to access markets or a sustainable external position, as well as if it is unable to avoid bank solvency problems that “could pose a systemic risk to the stability of the financial system of the euro area. “