–Next ESM Disbursement Will Not Happen Before June
BRUSSELS (MNI) – Euro area ministers will meet in Brussels Monday to assess Greece’s progress in implementing the 140 prior actions necessary to close the second review of the current ESM financial support program.
Signing off on the review would allow the Eurogroup to launch procedures to disburse a new financing line that could be between E6bn and E10bn, according to one European source. Such an amount is needed by Athens as more than E6bn of loans to the ECB and the IMF come due in July, the source added.
The disbursement will nevertheless not ne made until June, as a few steps are still needed to close the review. The Greek Parliament pushed through most of the outstanding legislation on Thursday and Friday, but a few need completing. They are of a more administrative nature, which means they will only require government action, not parliamentary action.
Euro area ministers are also expected to discuss in greater detail possible debt measures for Greece, following a renewed push from the International Monetary Fund to put Greek debt on a more sustainable footing. The Washington-based institution said it can’t participate in the program it if its experts do not consider the country’s public debt as ‘sustainable’.
The debate is likely to focus on the so-called ‘medium-term debt measures’ agreed by the Eurogroup in May 2016. The IMF is likely to ask for further clarity and details on what these measures are, and on the precise conditions for triggering them. “There are diverging as to whether the statement is sufficient as to the granularity of the measures,” said a senior EU official.
In 2016, Eurogroup said medium-term arrangements would only be implemented after the end of the program, i.e after 2018. They could include abolishing a step-up interest rate margin related to the debt buy-back tranche of the previous Greek programme, or in using some related profits as an ESM internal buffer to reduce gross financing needs.
The statement also mentions “early partial repayment of existing official loans to Greece by utilizing unused resources within the ESM programme”, as well as “targeted EFSF re-profiling”, such as extension of the weighted average maturities, re-profiling of the EFSF amortization or capping and deferral of interest payments.
Monday’s discussions could also focus on the 3.5% primary surplus that Greece is supposed to maintain for a still indefinite period. “But I don’t expect that to be the main point of contention,” said the senior official, who believes it will eventually be somewhere between 1 and 10 years.
FRIDAY, MAY 19, 2017 – 11:04
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