A definitive solution to all issues, namely the fourth assessment, the post-memorandum period and an additional relief for the Greek debt through the implementation of the Medium-Term measures, is expected at the Eurogroup meeting next Thursday, on June 21st.
At present, 3 individual texts are being written, whose final form will result as a decision of the meeting. The first concerns the alleviation of the Greek debt and the ways in which it will take place. According to the latest information from authority sources, the solution being promoted is based on the following key axes: extending the repayment time of the second memorandum of EUR 131 billion by the EFSF, with the extension being “secured” for nearly 9 years.
From then on, there will be a safety cushion from the unallocated resources of the third programme, which is expected to move to EUR 15 billion (the last installment of the 4th assessment) and return the European Central Bank’s profits from Greek bonds of EUR 12 billion, which may be returned in installments and be associated with some type of prerequisites.
As far as the IMF is concerned, Berlin seems to have fully reconciled itself with a purely consultative role for the Fund, so the IMF will remain as a “technical adviser”, while part of Greece’s debt (11 billion) will be redeemed by the ESM, shifting the interest rate on our country at more than two percentage points. In this way, the Fund is expected to publish a positive analysis for our country of the viability of the Greek debt, sending a positive “signal” on the markets as well. In any case, the Greek side is cautiously optimistic that a “good” solution will be given.
Increase of the minimum wage in the monitoring text
The second text will be about the way in which post-memoradnum monitoring (quarters and reports, etc.) will be carried out, which, according to the statements of all parties involved, will not include new terms and obviously will not be related to a programme. In this text, it is very likely that the increase in the minimum wage will be included in the strength of the Greek economy, while reference will be made to the irreversibility of some reforms. This will also meet the targets for primary surpluses.
Until 2022, the target for the primary surplus is 3.5% of the GDP and the Eurogroup meeting is expected to clarify just how much “above but close to 2% of the GDP” should be the primary surpluses until 2060. It is worth noting that the final target for all euro area countries is set at 2.6%.
Getting to the third text, this will be the so-called compliance report, which will also mark the end of the fourth assessment. According to authority sources, 87 of the 88 prerequisites of the fourth and final evaluation of the Greek programme will have been completed by Thursday morning. The only thing to be expected is the appointment of the Public Utility Organisations (DEKO) boards. However, this will also be completed within the month and, in any case, before the last installment is disbursed, which may reach EUR 15 billion, as mentioned above…. / IBNA