The roadmap out of the crisis
Gov’t official explains the conditions needed for the economy to recover and the country to hit the markets
BRUSSELS – Athens wants to agree with its eurozone peers on a roadmap that will lead Greece out of the economic crisis and back to the financial markets, according to a government source. For that to happen, though, a series of targets have to be met first.
The first is the signing of a technical agreement by November 28 at the Euro Working Group before the next Eurogroup meeting on December 5. The same source added that meeting this target will set the stage for the start of a detailed discussion on easing Greece’s debt. The second target concerns a staff-level agreement between the creditors and Athens on the second review by the December Eurogroup, and the third is the implementation of the short-term measures for the easing of the Greek debt, which the same official expects to be “more ambitious” than anticipated.
Crucially, the fourth goal is Greece’s inclusion in the European Central Bank’s bond-buying program (QE), as that will boost the country’s liquidity, assist its return to the markets with the issue of three-year bonds, lead to the lifting of capital controls and eventually terminate the bailout process.
“Everyone at the Eurogroup agreed Greece needs a clear exit plan from the program by 2018. For Greece to return to the markets then it first has to enter the QE process, which in turn means the lifting of the capital controls after an agreement on the debt,” the same official said. He also spoke of a positive atmosphere at the meetings and a friendly attitude by senior International Monetary Fund official Poul Thomsen. As for the medium-term measures to ease the debt, the same source said they will be for a five-year period and will constitute a combination of fixed interest rates, longer grace periods etc. 582.20 1.1038
The key to all this is the determination of the primary budget surplus targets after the program expires in 2018.
Two European officials said that there was no agreement on this at the meeting held after Monday’s Eurogroup by the Euro Working Group representatives of Germany, France, Italy and Spain, the group’s head Thomas Wieser and officials from the ECB, the IMF and the European Commission.