Wednesday, 11 May 2016
Following the adoption by the Greek parliament of a new policy package, the finance ministers in the Eurogroup met on 9 May to discuss the package.
The Eurogroup welcomed the package and stated that it “should pave the way for a successful completion of the first review of the ESM programme, upon the adoption of the agreed prior actions.”
ESM stands for the European Stability Mechanism. In July 2015 the Eurogroup decided that the ESM will provide Greece with up to €86 billion in financial assistance over three years. The new measures adopted by the Greek parliament in a vote last Sunday (8 May) concern an overhaul of the pension system and tax reforms.
In Greece the new measures are controversial. The adoption of the policy package had been preceded by a general strike against what the unions consider a new round of austerity measures.
The measures in the form of pension cuts and tax increases amount to € 5.4 billion or 3 % of GDP. They are supposed to result in a primary budget surplus of 3.5 % by 2018. If the budget goal is not achieved a correctional mechanism will automatically be implemented.
The Eurogroup stated that more technical work is required in the coming days. Further disbursements under the ESM programme will be considered by the Eurogroup on “full implementation of the actions by the Greek authorities and following national procedures where necessary”.
Greece had hoped that the Eurogroup would consider debt relief and reducing its unsustainable debt which stands at 177 % of GDP. The Eurogroup promised that it “stands ready to consider, if necessary, possible additional debt measures aiming at ensuring that Greece’s refinancing needs are kept at sustainable levels in the long-run.”
Any decision on debt relief was postponed to next Eurogroup meeting on 24 May. In what could be seen as a positive sign, the Eurogroup agreed to establish a benchmark for assessing the sustainability of the Greek debt.
“As agreed today, our teams will work intensively in the coming days to finalize the staff level agreement,” said the Commissioner for Economic and Financial Affairs, Pierre Moscovici. “On that basis, I am quite confident that we will be able to take positive decisions at our next meeting on 24 May. I think today we made work progress – very good work progress.”
In the European Parliament, a heated debate about the state of play of the Greek programme took place yesterday (10 May). Leaders of all the political party groups took the floor and criticized either the Greek government or the Eurogroup.
|Debate in the European Parliament
EPP leader Manfred Weber (DE) criticised Prime Minister Tsipras. Referring to the 0.7% growth figure in 2014, he blamed the Tsipras government for slipping below zero growth in 2015 and “harming the country”. He took Ireland as an example of a programme country that recovered as a result of reforms.
S&D leader Gianni Pittella (IT) said that the problem is not Athens, but the IMF with its policy of preventive austerity. “If they continue to sabotage an agreement, we have to go it alone”, he said.
ECR’s Notis Marias (EL) labelled the Greek programme as “violent and leading to a social Armageddon”.
ALDE’s Sylvie Goulard (FR) said too many issues are being pushed toward 2018 because of the UK’s EU referendum and elections in other countries and that it bears the risk of losing control over the adjustment programmes.
GUE’s Dimitris Papadimoulis (EL) criticised EPP leader Manfred Weber for his attack on Mr Tsipras: “He did not create the Greek debt. The Greek people voted for him and want to keep him as their Prime Minister.”
Green leader Philippe Lamberts (BE) said he did not share the optimism after yesterday’s euro group meeting on Greece: “The austerity of its creditors and the IMF is socially unacceptable. That’s too high a price to pay.”
The Brussels Times (Source: European Commission and European Parliament)