Greece handed ultimatum by ESM chief

Greece handed ultimatum by ESM chief


By Lefteris Yallouros – Athens

Pressure is piling on the Greek government to reach an agreement with the troika over the current review of the country’s adjustment program.

European Stability Mechanism chief, Klaus Regling, told cypriot newspaper “Politis” in an interview that a deal with the troika must be found if Greece wants to be granted a precautionary credit line and protect itself from bond market volatility in 2015.

“If not by the next Eurogroup meeting December 8th then definitely by the end of the year an agreement must be reached. If not, the remaining funds in the Hellenic Financial Stability Fund (whose objective is to contribute to the maintenance of the stability of the Greek banking system) must be returned and an EUR 1.8 billion tranche from the European Financial Stability Facility (EFSF) will not be disbursed” Regling said.

In the event of an agreement, Reging pointed out that Greece would benefit greatly as ” the market’s reaction to the country would improve and the path to a stable and viable recovery will be cleared.”

The fresh ultimatum to Greece, as Regling’s comments are seen in Athens, comes as Greek bond yields rose to 8.9 percent in late October from 5.6 percent in early September and troika officials have yet to return to Greece in order to conclude their crucial review of how reforms are progressing.

The troika has reportedly maintained that the review has to be completed properly, even if Greece has to extend its bailout at the end of the year rather than exiting with a precautionary credit line. Key reforms, including pensions and labor laws, will not be overlooked in order for a quick wrap-up of negotiations.

The troika’s stance could mean the extension of the current bailout by 6 to 15 months, a scenario examined by Eurozone finance ministers at a meeting in Brussels last which the Greek government wants to avoid at all costs as it would carry the political stigma of Greece still being under a bailout program.