Stockholm (Ekonomik) – On Monday, March 11, the finance ministers of the Eurozone met to discuss currency union’s housing markets, the draft budget of Latvia and the European Commission’s 2nd enhanced surveillance report on Greece. Based on the latter, the Eurogroup decided to postpone the disbursal of planned financial assistance to the Greek government until after its April meeting.
“A lot of water has passed under the bridge. For instance, Greece has recently issued a long term bond, 10-year maturity. This is a milestone in the country’s return to normal market functioning and it reinforces Greece’s fiscal buffer. Also, the budget for 2019 was adopted projecting that the primary surplus target of 3.5% of GDP will again be achieved. It will be the fourth year in a row that Greece will deliver on this target. This shows that the government’s commitment with sound public finances outlives the programme.” commented Mário Centeno, President of the Eurogroup, at the end of the meeting.
However, there were still some standing issues. “The main outstanding issue is a potential new scheme for the protection of primary residences. We invite the upcoming EWG to examine whether this important scheme has been agreed with the institutions. If all reform commitments are met, the Eurogroup will in April consider the implementation of further debt relief measures envisaged in our June 2018 meeting,” Mr Centeno concluded.
The debt relief measures discussed by the president of the Eurogroup, worth € 970 million, are the first tranche of policy-contingent financial aid to Greece agreed by the Eurogroup on 22 June 2018. The holdup was a proposed reform of insolvency protection covering primary residences. In its 27 February 2019 report, the European Commission warned that the new scheme “raises serious concerns regarding its impact on the payment culture and bank balance sheets and its overall design could enable strategic defaults.”
According to a report by Ekathimerini, Greek creditors are asking that the state protection offered to borrowers be decreased from € 260,000 worth of primary residence real estate to €100,000.
The Greek government took a very conciliatory tone with regards to this decision from the Eurogroup. Ekonamik could not find any official government statement issued on this occasion. The only official reference we could find to this meeting was in the finance ministry’s March 15 Economic Bulletin. The bulletin mentioned this in passing, focusing on the positive part of Mr Centeno’s comments, stating that “the Eurogroup confirmed that Greece’s reform momentum remains on track and that the outstanding actions are due to be finalized imminently.”
The reform proposal is expected to be adjusted on time for the Eurogroup to agree to disburse the funds at its next meeting in April.
Picture © European Union