Credit line route backed
Eurogroup agrees to study precautionary support to help Greece into next phase
The head of the Eurogroup, Jeroen Dijsselbloem, said yesterday that eurozone finance ministers are behind the idea of providing Greece with the financial support that would allow it to exit its bailout at the end of the year without requiring further funding from the International Monetary Fund.
“There is strong support for a precautionary credit line in the form of an existing European Stability Mechanism tool called the ECCL – Enhanced Conditions Credit Line – and that is the path we will now further pursue and work on the conditions that will go with that,” Dijsselbloem told a news conference.
“There is also a broad understanding the IMF needs to continue being involved and a further discussion will have to take place on the exact form of this involvement,” the Eurogroup chief said after the ministers met in Brussels.
According to Reuters, three options to help Greece exit its bailout at the end of the year were discussed by eurozone finance ministers. They all center around the use of some 11.5 billion euros in bank recapitalization funds remaining with the Hellenic Financial Stability Facility (HFSF).
In the first option, the recapitalization money would be returned and Greece would instead apply for an ECCL from the ESM.
This would mean signing a new memorandum of understanding, which the gov- ernment wants to avoid at all costs.
Under the second scenario, the bank recapitalization money could be used for Greek debt servicing and turned into a financial buffer.
The third option is to extend the current bailout by six to 15 months. That would give Greece more time to meet the criteria for the release of the last, 1.8-billion-euro, tranche of the existing program, which will be lost unless it is disbursed before the end of the year.
Eurozone finance ministers would then agree that the 11.5 billion euros could be put to a different use after it is returned to Greece’s lenders at the end of the year under a oneyear extension of the bailout.