Eurozone finance ministers are ready to further flesh out possible debt relief options for Greece once further progress in made in the latest review of its bailout programme, the president of Eurogroup has said.
Speaking in Brussels on Tuesday, Jeroen Dijsselbloem said he hoped a “staff level agreement” on the review would be completed by finance ministers’ next meeting on December 5.
“This would allow the Eurogroup to have a further discussion on the
short, medium, and long term debt measures needed,” he said.
Should the agreement on the review be reached in time,
December’s meeting will see ministers engage in intense negotiations
between the euro area and International Monetary Fund on whether the
IMF will join the €86bn bailout of Greece – a decision with major
implications when it comes to parliamentary support for the Greek
programme in Germany and some other euro area nations.
A key point to be resolved in those talks will be how long Greece will be expected to maintain the 3.5 per cent primary budget surplus target that the country is scheduled to hit in 2018.
“It will be one of the key debates,” said the Dutch finance minister, adding:
The IMF has argued that you cannot ask Greek to maintain that for a very long time, and others have said that, `well, it’s going to be necessary given the fact that Greece has to comply with the Stability and Growth Pact’.
So, in between those two we will need to find a realistic path forward, and I’m saying realistic because I think the IMF has a point that running a primary surplus of 3.5 for a very long time is a huge thing to ask.
A primary surplus measures the budget excluding debt repayments. The Eurogroup president added that he hoped the IMF would become “fully involved again” in the programme.
Mr Dijsselbloem also took a veiled swipe at a recommendation from the
European Commission that the euro area should aim for a fiscal stimulus equivalent to 0.5 per cent of GDP next year, pointing out that it runs counter to budget plans that governments have already agreed on with the EU.
The Commission made the recommendation earlier this month, as a way of putting pressure on countries in a strong budgetary position, such as Germany and the Netherlands, to do more to boost demand and stimulate growth.
“Some would argue that given the position where we are in the economic
cycle, where the output gap is closing, that in some countries it
would not be wise to stimulate further with fiscal policy,” he said.
Commission officials “need to realise” that governments are put in a
complicated situation if the institution’s guidance on the broader
fiscal stance clashes with EU budget rules intended to make sure
nations do not overspend, he said.