Eurogroup says Greece needs more austerity

Greece needs to implement further fiscal measures in order to unlock €1 billion of funding due to the country under its bailout programme, the head of the group of 17 euro zone finance ministers has warned.

Speaking after yesterday's eurogroup meeting in Brussels, Jeroen Dijsselbloem said it was highly unlikely that disbursement of the outstanding tranche could be achieved before the end of the year.

“We are aware of the efforts undertaken by Greece, and the difficult political situation, yet the job is not yet done. Further measures which were already in the agreed MOU [memorandum of understanding] – we’re not talking about new measures – need to be implemented fully.”

Domestic pressure
While a small team of troika officials travels to Athens today for technical discussions, a full review has been postponed until January amid disagreements about the level of fiscal consolidation needed in 2014. The government of Greek prime minister Antonis Samaras is coming under huge domestic pressure not to implement further cuts as a condition of its bailout programme.

With the results of stress tests on Slovenia's banks due later this week, the Slovenian state secretary also updated ministers on the situation in that country's financial sector, informing the eurogroup that Slovenia would be able to deal with issues in its banking sector without outside support.

“This is where we stand. We will now await the outcome of the asset quality review of Slovenian banks and will be informed as soon as this is finalised,” Mr Dijsselbloem said.

Focus today turns to new EU-wide rules on banking resolution, with European finance ministers hoping to strike agreement on contentious plans to manage and fund bank wind-downs before year-end.

Yesterday, German officials rejected reports they had made wholesale concessions to the European Commission on bank resolution. However, they indicated they could envisage a limited role for the European Commission in shuttering EU banks – as long as it was prohibited from overturning decisions made by member states.

“We need an economically sensible solution that protects the taxpayer, a clean bail-in regime and a secure and stable legal basis,” said a senior German official yesterday.

German officials said that, “as far as possible”, decisions should be taken by “by those with the necessary expertise” – primarily a European resolution board comprising members drawn from national boards.

'Compromise'
"Down the road we could find a compromise on who makes the formal decision and how this is divided up, between commission and European Council," added the official.

Berlin remains opposed to a resolution regime that impinges on national sovereignty of member states – Berlin’s core concern over European Commission involvement.