Strict post-bailout framework

Document seen by Kathimerini ties debt relief to targets as Merkel looks to ‘final step’ before program exit

A document setting out Greece’s post-bailout commitments seen by Kathimerini stipulates that the country will be obliged to meet strict fiscal targets and continue implementing economic reforms that were agreed during the bailout years.

Confirmation of the enhanced supervision that Greece will face once it emerges from its third international bailout in late August came as German Chancellor Angela Merkel said she hoped tomorrow’s scheduled summit of eurozone finance ministers would mark the “final step” before Greece’s exit.

Speaking during a joint press conference with French President Emmanuel Macron at Meseberg castle, near Berlin, Merkel said Greece’s exit will be an auspicious moment for measures to be taken to fortify the eurozone given that no euro area country will be committed to a bailout program.

There are hopes tomorrow that eurozone finance ministers will sign off on a final tranche of rescue loans for Greece and finalize debt relief measures, as well as agreeing on postbailout supervision.

According to the document seen by Kathimerini, Greece will have to enforce legislated reforms and meet budget targets systematically, at least until 2022, in order to unlock certain debt relief measures.

Those measures will include the return of profits that eurozone central banks made on Greek government bonds and the abolition of an originally agreed increase on the interest on European Financial Stability Facility (EFSF) loans.

Reviews will be carried out every three months, following visits by foreign monitors to Athens, and the reports they issue are expected to influence the stance of international markets opposite Greece, which aims to fund itself independently once it emerges from its third bailout in late August.

The document sets out six policy areas that foreign officials will continue to monitor: fiscal performance and taxation, social welfare and health, the labor market, Greek banks and the high proportion of non-performing loans, privatization, and public administration.

Among Greece’s commitments that will be closely monitored by its creditors are its promise to produce high primary surpluses.