Credit line seen likely for 2018

Lenders ex­pect Greece to need help to exit pro­gram, Fi­nance Min­istry knows third re­view won’t be easy

Kathimerini English - - Focus - EIRINI CHRYSOLORA

Not ev­ery­one in the gov­ern­ment shares the op­ti­mism that Prime Min­is­ter Alexis Tsipras ex­pressed re­cently that Greece will be able to achieve a “clean exit” from the bailout pro­gram in Au­gust 2018, in other words with­out the sup­port of a credit line.

Fi­nance Min­istry of­fi­cials are pre­par­ing for the start of the third re­view, which in­volves push­ing through a number of prior ac­tions that have to be com­pleted. They are also pre­par­ing new leg­is­la­tion and plan­ning for the pos­si­bil­ity of Greece need­ing a credit line af­ter the bailout pro­gram ends. This would come with con­di­tions, al­though they would be less strict than the terms Athens cur­rently has to meet. In its strictest form, the Euro­pean Sta­bil­ity Mech­a­nism’s credit line, or ECCL, fore­sees a quar­terly re­view.

For Greece to make a clean exit from its pro­gram, it needs the full con­fi­dence of the mar­kets so that it can bor­row at a rea­son­able rate. Sources on the in­sti­tu­tions’ side do not be­lieve this will be pos­si­ble. The credit line would pro­vide some se­cu­rity, help­ing se­cure bet­ter bor­row­ing terms from the mar­ket.

Ex­actly what will hap­pen, though, is still un­der dis­cus­sion. The third re­view is ex­pected to be­gin af­ter the Ger­man elec­tions, which are sched­uled for Septem­ber 24. Ac­cord­ing to sources, though, the Greek ne­go­ti­at­ing team will hold pre­lim­i­nary talks with the lenders to­ward the end of Au­gust or be­gin­ning of Septem­ber.

The next Euro Work­ing Group is due to take place on Septem­ber 4, when of­fi­cials are ex­pected to dis­cuss the im­ple­men­ta­tion of the com­mit­ments that Greece has made. This will be fol­lowed by an in­for­mal Eurogroup in Estonia on Septem­ber 15.

The gov­ern­ment does not ex­pect the re­view to be a walk in the park. In fact, sources sug­gest that Fi­nance Min­istry of­fi­cials ex­pect sev­eral is- sues, such as a cuts to ben­e­fits, will be tricky. Nev­er­the­less, Athens aims to com­plete the re­view by the end of the year. This will in­volve wrap­ping up 90 out of 113 prior ac­tions, sources say.

The Fi­nance Min­istry does not fore­see the In­ter­na­tional Mon­e­tary Fund ask­ing for ad­di­tional mea­sures in 2018, even though the IMF does not ex­pect Greece to reach its 3.5 per­cent of GDP pri­mary sur­plus tar­get.


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