The Eurogroup recalls that a full staff-level agreement has been
reached between Greece and the Troika on updated programme
conditionality and that, according to the Troika, Greece has implemented
all agreed prior actions.
The Eurogroup in particular welcomes
the updated assessment of the Troika that Greece has implemented in a
satisfactory manner a wide ranging set of reforms, as well as the budget
for 2013 and an ambitious medium term fiscal strategy 2013-16.
The
Eurogroup noted with satisfaction that the updated programme
conditionality includes the adoption by Greece of new instruments to
enhance the implementation of the programme, notably by means of
correction mechanisms to safeguard the achievement of both fiscal and
privatisation targets, and by stronger budgeting and monitoring rules.
Greece has also significantly strengthened the segregated account for
debt servicing. Greece will transfer all privatizations revenues, the
targeted primary surpluses as well as 30% of the excess primary surplus
to this account, to meet debt service payment on a quarterly
forward-looking basis. Greece will also increase transparency and
provide full ex ante and ex post information to the EFSF/ESM on
transactions on the segregated account.
The Eurogroup again
commended the authorities for their demonstrated strong commitment to
the adjustment programme and reiterated its appreciation for the efforts
made by the Greek citizens. The Eurogroup noted that the outlook for
the sustainability of Greek government debt has worsened compared to
March 2012 when the second programme was concluded, mainly on account of
a deteriorated macro-economic situation and delays in programme
implementation
The Eurogroup considered that the necessary
revision in the fiscal targets and the implied postponement of a primary
surplus target of 4.5% of GDP from 2014 to 2016 calls for a broader
concept of debt sustainability encompassing lower debt levels in the
medium term, smoothing of the current financing hump after 2020 and
easing of its financing.
The Eurogroup was informed that Greece is
considering certain debt reduction measures in the near future, which
may involve public debt tender purchases of the various categories of
sovereign obligations. If this is the route chosen, any tender or
exchange prices are expected to be no higher
than those at the close on Friday, 23 November 2012.
The
Eurogroup considers that, in recapitalising Greek banks, liability
management exercises should be conducted in respect of remaining
subordinated debt holders so as to ensure a fair burden sharing.
Against
this background and after having been reassured of the authorities'
resolve to carry the fiscal and structural reform momentum forward and
with a positive outcome of the possible debt buy-back operation, the
euro area Member States would be prepared to consider the following
initiatives:
•A lowering by 100 bps of the interest rate charged
to Greece on the loans provided in the context of the Greek Loan
Facility. Member States under a full financial assistance programme are
not required to participate in the lowering of the GLF interest rates
for the period in which they receive themselves financial assistance.
•A lowering by 10 bps of the guarantee fee costs paid by Greece on the EFSF loans.
•An
extension of the maturities of the bilateral and EFSF loans by 15 years
and a deferral of interest payments of Greece on EFSF loans by 10
years. These measures will not affect the creditworthiness of EFSF,
which is fully backed by the guarantees from Member States.
•A
commitment by Member States to pass on to Greece's segregated account,
an amount equivalent to the income on the SMP portfolio accruing to
their national central bank as from budget year 2013. Member States
under a full financial assistance programme are not required to
participate in this scheme for the period in which they receive
themselves financial assistance.
The Eurogroup stresses, however, that the above-mentioned benefits of initiatives by euro area
Member
States would accrue to Greece in a phased manner and conditional upon a
strong implementation by the country of the agreed reform measures in
the programme period as well as in the post-programme surveillance
period.
The Eurogroup is confident that, jointly, the
above-mentioned initiatives by Greece and the other euro area Member
States would bring Greece's public debt back on a sustainable path
throughout this and the next decade and will facilitate a gradual return
to market financing. Euro area Member States will consider further
measures and assistance, including inter alia lower co-financing in
structural funds and/or further interest rate reduction of the Greek
Loan Facility, if necessary, for achieving a further credible and
sustainable reduction of Greek debt-to-GDP ratio, when Greece reaches an
annual primary surplus, as envisaged in the current MoU, conditional on
full implementation of all conditions contained in the programme, in
order to ensure that by the end of the IMF programme in 2016, Greece can
reach a debt-to-GDP ratio in that year of 175% and in 2020 of 124% of
GDP, and in 2022 a debt-to-GDP ratio substantially lower than 110%.
As
was stated by the Eurogroup on 21 February 2012, we are committed to
providing adequate support to Greece during the life of the programme
and beyond until it has regained market access, provided that Greece
fully complies with the requirements and objectives of the adjustment
programme.
The Eurogroup concludes that the necessary elements are
now in place for Member States to launch the relevant national
procedures required for the approval of the next EFSF disbursement,
which amounts to EUR 43.7 bn. EUR 10.6 bn for budgetary financing and
EUR 23.8 bn in EFSF bonds earmarked for bank recapitalisation will be
paid out in December. The disbursement of the remaining amount will be
made in three sub-tranches during the first quarter of 2013, linked to
the implementation of the MoU milestones (including the implementation
of the agreed tax reform by January) to be agreed by the Troika.
The
Eurogroup expects to be in a position to formally decide on the
disbursement by 13 December, subject to the completion of these national
procedures and following a review of the outcome of a possible debt
buy-back operation by Greece. |
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