EurActive.com –The European Court of Auditors published a report assessing the effectiveness and results of the Greek bailouts on Thursday, 16 November.
The EU and the International Monetary Fund (IMF) agreed on a €110 billion bailout in 2010, followed by another, €172.6 billion programme in 2012. Greece is currently under a third, €86 billion programme agreed in 2015.
The auditors examined the role of the European Commission and found shortcomings in its approach, which they said overall lacked transparency.
However, the ECB which has played a crucial role in the three bailouts, said that the Court of Auditors had no mandate to assess its action and “did not provide sufficient amount of evidence” invoking the banking confidentiality and denied access to specific information.
“It [ECB] did not provide sufficient amount of evidence and thus we were unable to report on the role of the ECB in the Greek programmes,” the auditors said.
The report pointed out that the European Parliament had specifically asked the Court to analyse the role of the ECB in financial assistance programmes. It noted that EU auditors had faced similar problems with obtaining evidence from the ECB when reviewing the Single Supervisory Mechanism.
The report highlighted the ECB’s decision on 4 February 2015 to suspend the waiver for accepting Greek government bonds as loan collateral, thereby automatically increasing short-term borrowing costs for the banks.
That happened during the tough negotiations between Greece’s Syriza government and its international lenders before the third bailout. Many believed it was meant to put additional pressure on Alexis Tsipras’ government to back down and give in to the demands of the lenders.
However, EU auditors have had doubts about the transparency of that decision.
The EU auditors analysed the efficiency of the three bailout programmes received by Greece in 2010, 2012 and 2015.
“These programmes promoted reform and avoided default by Greece. But the country’s ability to finance itself fully on the financial markets remains a challenge”, said Baudilio Tomé Muguruza, ECA member responsible for the report.
The auditors stressed that the bailouts’ conditions were “neither sufficiently prioritised by importance nor embedded in a broader strategy for Greece”.
“Furthermore, the programmes’ macroeconomic assumptions were poorly justified. Cooperation with other institutions [like IMF] was effective but informal.”
The report explained that were no guidelines or specific procedures for cooperation between institutions and the process was not formally documented (e.g. in minutes) which impacted the “transparency” of the process.
In general, the auditors emphasised that the objectives of the Programmes had been achieved “only to a limited extent” because Greece remained unable to tap international financing markets.
“They did bring about significant consolidation, with the underlying budget balance improving by 17% of GDP between 2009 and 2015. However, the decline in economic activity during the same period, coupled with financing costs on previously accumulated debt, meant that Greece’s debt-to-GDP ratio consistently increased. As a result, the country remains unable to fully meet its financing needs on the markets.”
Greece and its lenders are currently negotiating the third review of the current bailout programme. All parties have expressed hope that the review will be quick and concluded before the end of the year.
The Greek government has stated the country will be ready to exit the bailout programme in August 2018 while Commission Spokesperson Margaritis Schinas recently said that “post-crisis Greece is not far away”.
