Hope for more EU credit after bailout exit

Financial Mirror (Cyprus) - - FRONT PAGE -

Prime Min­is­ter An­to­nis Sa­ma­ras hopes that his frag­ile coali­tion gov­ern­ment might se­cure an ad­di­tional credit cush­ion from its euro zone part­ners if it man­ages to meet the strict terms re­quired to exit the bailout pro­gramme at the end of this year, a source close to dis­cus­sions was quoted by Reuters as say­ing.

Dis­cus­sions with Greece, which has had a to­tal of 240 bln euros in loans, fo­cused on a new line of credit with the Euro­pean Sta­bil­ity Mech­a­nism, the source said.

The Han­dels­blatt news­pa­per quoted Ger­man gov­ern­ment sources as say­ing a pre­cau­tion­ary credit could help en­sure Athens stuck to a pro­gramme of eco­nomic re­forms pre­scribed by the EU in re­turn for a bailout of pub­lic debt.

The Greek gov­ern­ment is in ne­go­ti­a­tion with the troika of in­ter­na­tional lenders ahead of the ex­piry of its bailout pack­age on De­cem­ber 31, say­ing it wants its bailout to fin­ish when EU fund­ing stops, though the IMF is sched­uled to stay on un­til early 2016.

An exit from su­per­vi­sion by the troika of the Euro­pean Com­mis­sion, Euro­pean Cen­tral Bank and IMF would be popular with vot­ers, with po­lit­i­cal an­a­lysts sug­gest­ing a snap elec­tion is likely next March.

Euro zone min­is­ters meet­ing in Lux­em­bourg on Mon­day warned that, de­spite im­prove­ments, the Greek econ­omy re­mains frag­ile.

Sep­a­rately, Eurogroup chair­man Jeroen Di­js­sel­bloem said any credit ex­tended to Greece after a bailout exit would also be con­di­tional on eco­nomic re­forms.

The Greek gov­ern­ment has been keen to avoid fur­ther de­tailed con­di­tions for re­form, which have been deeply un­pop­u­lar.

Di­js­sel­bloem told re­porters it was pre­ma­ture to speak of a pre­cau­tion­ary line of credit be­fore a re­view of Athens’ re­form ef­forts by the troika was com­plete.

Greece be­gan talks to end the IMF aid to the coun­try over the week­end, but will con­tinue to have rou­tine post-bailout reviews by the Wash­ing­ton-based group, a Greek of­fi­cial said after talks with the IMF’s chief on Sun­day.

“Ev­ery­thing is on the ta­ble, the dis­cus­sions have started. The IMF is pos­i­tive be­cause it be­lieves that it has con­trib­uted to progress in Greece,” a fi­nance min­istry of­fi­cial said after a meet­ing with IMF chief Chris­tine La­garde.

“The IMF con­tin­ues with a post­pro­gramme re­view in ev­ery coun­try it lends to...we will have a re­la­tion­ship with the IMF but not un­der the same con­di­tions.”

The IMF in a state­ment con­firmed that La­garde met Greek of­fi­cials in­clud­ing the fi­nance min­is­ter and the Bank of Greece gov­er­nor and praised Greece for im­prov­ing its fis­cal po­si­tion and urged it to im­ple­ment key struc­tural re­forms.

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