EU SUMMIT:THE SECOND EU-IMF rescue of Greece moved forward yesterday as euro zone finance ministers ruled that Athens has taken the legal actions required to initiate the new bailout.
Although final political approval for the €130 billion rescue will not be given until the completion of a debt-swap with the country’s private creditors next week, the ministers’ ruling yesterday marked a crucial procedural step.
The development saw rare praise for Greece from German finance minister Wolfgang Schäuble, long a critic of the country’s failure to implement promised reforms. “We saw today that Greece has made a lot of effort and has made a lot of progress,” he said.
Their move means the European Financial Stability Facility bailout fund can now raise money for a buy-back scheme for Greek bonds used as collateral for emergency central bank funding. The scheme will continue for as long as such bonds are deemed to be in selective default during the ongoing debt-swap.
“It’s been a while since the Greek people heard good words. Today we heard good words,” said Greek finance minister Evangelos Venizelos. Attention now shifts to results of the debt-swap which is due to conclude late next week and anticipated to cut the Greek national debt by up €107 billion.
Most private bondholders are expected to take part, although Greece insists it is looking for 90 per cent participation to proceed. However, the government has passed laws enabling it to force all bondholders to take part under certain conditions.
The ministers met for an emergency meeting yesterday afternoon in Brussels in the hours before EU leaders gathered for a scheduled summit on the financial crisis.
The decision on Greece was the main political development before the summit. Assuming all goes to plan, the ministers plan a conference call next Friday to give the final go-ahead for the bailout.
“The euro group welcomes the assessment of the troika that Greece has made sufficient progress in completing the agreed prior actions,” said Luxembourg premier Jean-Claude Juncker, chief of the group of ministers.
“All required legislation by the parliament and the ministerial cabinet has been adopted, and a few pending implementing acts should be completed shortly,” he added.
The progress achieved yesterday follows months of division over the second Greek bailout, in which a number of senior German and European figures raised the prospect that the country might leave the euro zone.
“Ministers note with satisfaction that Greece thereby undertook decisive and swift legislative action in the areas of fiscal consolidation, revenue administration, pension reform, financial sector regulation and supervision and growth-enhancing structural reforms,” Mr Juncker said.
“This will allow the Greek adjustment effort to regain momentum, which – together with a rigorous implementation of the agreed policy package for the new programme – constitutes the basis for putting the public finances and the economy of Greece back on a sustainable path.
“The troika will finalise in the next few days the detailed assessment of the quality of the transposition of prior actions in Greek legislation.”
