As the Greek government prepares to close its third bailout program, there is anticipated row between Eurozone finance ministers and the Greek government over the terms of a “golden goodbye”.
One of the major issues that is likely to surface in the deliberations is concerns of a likely fourth collapse that Greece could face if the agreement with EU that would help to write off some debt is signed.
Unless the EU reduces Greece’s debt burden, it is most likely that the International Monetary Fund would pull out from the agreement. The IMF was part of the monitoring body – along with the European Commission and the European Central Bank, that oversaw the implementation of reforms in Greece.
Greece could face demands of stricter clauses in the reform programme which the country has to impose and against the final bailout payoff by hardline countries such as Germany, Finland and Austria, in case the IMF decides to pull out of the agreement.
“Everyone has an interest to alleviating the burden, for Greece and the rest of the creditors,” said Olivier Bailly, the chief adviser to the EU’s finance commissioner, Pierre Moscovici. “If we leave too much burden, this will slow down Greece’s recovery.”
The impact of the pulling out of the IMF from the agreement for the final phase of monitoring which is expected to last till 2022 was played down by him. “What is important is that the IMF give its view on debt measures. What the markets expect is that it says they are credible enough,” he said. he however admitted that Germany would come under pressure by the IMF pulling out of the final agreement.
A final loan payment of between €10bn and €12bn and a cash loan of up to €20bn is expected to be passed by a meeting of the finance ministers of the 19-member states of the EU slated to be held on later this week. The payments are due to be the last of the €86bn bailout agreed in 2015.
The 88 so-called “prior actions” – that created the background for the deal with eurozone finance minister, was passed by the Greek parliament last week. in order to comply with the exit conditions, Greece needs to reduce expenditure on pensions and implement a number of other reforms in the public sector.
Compared to that the surveillance that was imposed on Ireland or Portugal, it is expected that Greece will have to agree to stricter surveillance regimen. Both Ireland and Portugal had earlier been subjected to bail out programs.
It is expected that under the new surveillance measures, the Eurogroup will demand that surveillance visits be made to Greece every three months instead the customary half yearly ones.
Hans Vijlbrief, the top EU official advising eurogroup ministers, said: “It’s very important that Greece can stand on its own feet. If it’s not credible, we won’t come out. This is the first condition.”
(Adapted from TheGuardian.com)