10 steps to Greece’s clean bailout exit at the end of the programme


Luxemburg Times — Here are the 10 crucial items on Greece’s calendar before the end of the bailout programme:

  • This week, the government plans to submit to parliament a bill to implement all the measures needed to conclude the third bailout review. New policies have to be voted on by January 17 so that auditors monitoring the programme can present Greece’s compliance report at the January 22 Eurogroup meeting, which will then approve the disbursement of the next bailout tranche.
  • In late January, European banking authorities will finalise the scenarios under which the balance sheets of Greek lenders will be stress-tested. The banks have to conclude these audits of their capital adequacy earlier than their EU counterparts.
  • By early February, Greece intends to issue a new bond, with a maturity most likely of three or seven years, as it strives to regain full market access after years in the wilderness.
  • During the first 10 days of February, the European Stability Mechanism is expected to disburse the bailout tranche attached to the implementation of the third review’s conditions. The amount of money Greece will get has yet to be agreed on, but it will be at least €5.5 billion, according to the Greek Finance Ministry.
  • In February, Greek banks will start sending data to the Bank of Greece and European authorities for the stress tests.
  • The Greek government expects that in February creditors will start discussing further debt relief measures.
  • In early March, the fourth bailout review is expected to begin. It isn’t clear yet when creditor representatives will return to Athens, but the review has to start in March if Greece wants to complete another 82 measures on time.
  • One of the most important gatherings between creditors before the end of the current bailout programme will take place in Washington on April 20-22. The IMF’s spring meetings will probably give creditors the opportunity to discuss debt relief and what’s next for Greece.
  • In early May, the stress test results will be announced. This will show if Greek lenders need more capital and, if so, how serious the problem is for them and for Greece.
  • By the end of May or June, both the Greek government and creditors want to conclude the fourth bailout review and strike a deal on the conditions for any further debt relief and the post-programme life for Greece.

Greek authorities are ruling out any kind of new programme, but the Bank of Greece’s Governor Yannis Stournaras recently said an emergency credit line after August would boost investor confidence.

European officials also say there will be some kind of “follow-up arrangement until 2022,” according to a person with knowledge of the discussions, since Greece has committed to primary budget surpluses of 3.5% of gross domestic product until then.

In theory these follow up arrangements should not be any harsher than they are at the moment, as most of the fiscal measures demanded by the lenders have already been approved by Greek parliament in advance.

The IMF – which is still involved in the bailout – still expects a substantial debt reduction at the end of the programme to make the Greek debt of 180 % of the country’s GDP sustainable.

It is however very difficult  to predict the effects of budget targets set so far in advance as there is a huge number of unpredictable variables thac can come into play such as the state of the world economy, future developments in europe about the euro and even natural disasters can change the best laid plans of countries.

And both the EU and the IMF have not been very successful even with their short term financial projections on the Greek economy so far, so some deviation from these targets can be expected.  Hopefully Athens can use the  more positive and friendlier climate towards Greece  in a Europe that tries to hold itself together to its advantage, to renegotiate some of these targets which for many – IMF included – cannot be achieved.