EURO ZONE finance ministers edged towards agreement on a second bailout for Greece, but only at the price of increased external supervision over the rescue.
A succession of ministers made it clear in Brussels yesterday that a deal was within reach, striking an upbeat tone absent from their recent meetings on Greece.
They discussed a €130 billion EU-IMF loan package and a debt restructuring deal with private creditors to cut Greece’s national debt by up to €100 billion.
Greek minister Evangelos Venizelos said he was optimistic, although anxiety remained that the package will not bring the Greek national debt to the target of 120 per cent of national output by 2020.
“We need a clear political approval from the euro group.
“We are ready to initiate the official procedure on the private sector involvement,” he added, referring to the debt-restructuring deal.
European officials have said the meeting yesterday and follow-on talks today present a final opportunity to sign off on the deal in time to complete a debt-swap before a €14.5 billion debt falls due on March 20th.
However, it is likely that emergency loans for Greece will be held in an escrow account and the execution of the bailout will be monitored in Athens by a full-time team of European inspectors.
“Greece has evidently made great efforts and now we must continue the work,” said German minister Wolfgang Schäuble, one the country’s biggest doubters.
Although Mr Schäuble backtracked on a demand to have the bailout introduced in discrete phases, he said Greece had accepted the principle of making loan payments into an escrow account. This would give Greece’s official creditors greater control over how the money was spent.
The EU-IMF “troika” would be able to reserve loans for debt repayments and withhold the money if the government fails to fulfil its promises.
“Money should be in a special blocked account, an escrow account as it’s known in English,” said Dutch minister Jan Kees de Jager. While he called for more assurances from Athens, other figures heralded progress in the talks.
“Today we have all the elements we need to reach an agreement,” said French minister François Baroin.
“All the pieces are on the table, we have to put them together. That’s what we’re going to do this afternoon.” Minister of State for Finance Brian Hayes, who represented the Government, adopted a cautious stance.
“A lot of progress has been made in the last number of weeks and hopefully we can get this issue over the line today,” he told reporters.
“We’re here to find out what is going to happen, and whilst there is some confidence that we can get a deal, it all very much depends.”
Luxembourg’s minister Luc Frieden said a troika report on Greece’s debt sustainability was still awaited but he was confident a deal could be struck.
“On both open questions, the participation of the private sector and the second aid programme, I think we can come to an agreement.”
