An emergency Eurogroup held on Greece Monday, May 9, ended with finance ministers of the eurozone welcoming the package of austerity measures that Greece agreed to though discussions would continue at the Eurogroup on May 24. Athens’ proposal was accepted, but with a couple of new conditions to beef it up, said Eurogroup Chief Jeroen Dijsselbloem, when speaking to the press following the meeting.
Cuts and contingency measures
1) Greece will have to slash spending with “expenditure measures across the board – discretionary and non-discretionary.”
2) Greece would adjust measures in a subsequent budget to add revenue elements that could make it more balanced as these would replace some expenditure cuts.
3) The package must be agreed with creditors before it is put for voting as “it would be unfortunate if Greece implemented contingency measures and then the eurogroup said it wasn’t good enough.”
Real.gr reports that Greek Finance Minister Euclid Tsakalotos suggested that cuts be made by presidential decree rather than law in the case that fiscal targets weren’t met. Practically this means that every year on April 30, the Greek Minister of Finance would have to check for fiscal imbalances with triggers to ensure that contingency measures kick in automatically, without social exclusions (ie pensioners, vulnerable groups) in case Greece veers off course.
This decision would be made in 2018.
Debt Sustenance and Relief
A “first round” of talks took place with eurozone ministers looking at Greece’s short-term, medium-term and long-term debt sustainability. For the short term, it is hoped that Greece’s debt can be optimized to lower repayment costs. For the medium term, the eurozone working group has been asked to look at measures to take place in 2018 at the end of the program, including a possible lowering of Greece’s debt costs, by lowering interest rate costs or changing repayment dates. In the long term, the eurogroup stands ready to consider further debt relief if necessary, provided that Greece is compliant.
European Commissioner Pierre Moscovici said that ensuring that Greek debt is sustainable is a fundamental element of the agreement sealed last summer. He applauded the decision to carving Greece’s debt relief into a short-term, medium-term and long-term basis.
European stability Mechanism Chief Klaus Regling warned that the liquidity situation for Greece is getting tighter at a time when an important 3.5-billion-euros worth of debt repayments for Athens are coming up in July. He reminded of Greece’s big debt write-down in 2012.
All eyes are now cast on the May 24 Eurogroup when an agreement is expected to be reached.
See all the latest news from Greece and the world at Greekreporter.com. Contact our newsroom to report an update or send your story, photos and videos. Follow GR on Google News and subscribe here to our daily email!
