Greece: the ugly duckling closer to the reward – TVI24

Used to be the ugly duckling of the European Union in the last years, Greece can get to know now some benesse after both budget effort wrapped in the arms-of-iron. The Eurogroup will meet on Monday and everything indicates that the relief of the Greek debt – currently at around 176% of Gross Domestic Product – will move forward as a reward for the discipline and by the greater willingness of the prime minister, Alexis Tsipras, to comply with the requirements and the need . Only that it may be difficult for the European Stability Mechanism to convince the International Monetary Fund to also lend money under the third Greek rescue, which is already underway. And at the gates of the D-day itself the IMF will have left new red alerts to the Greek authorities.

All of this happens in the post-referendum in Italy and austrian elections. The end of the week and the start of the working week are fertile in important events to measure the state of the nerves of the European Union.

The European Stability Mechanism (ESM, the acronym in English) – which is at the bottom of the vehicle that makes loans to euro zone countries in difficulties, and that, for this, arranges financing on the market – proposes a series of measures to alleviate the public debt of Greece.

"This is a preliminary document", noted a spokesperson for the ESM to the Wall Street Journal to underline that it has not yet been approved by the Eurogroup. That is, is still subject to change, but the scenario is this:

• alleviate the short-term debt with the application of the rates of interest current, which are low, loans, future (even though the interest rates in the market rise, thereby ensures that Athens will pay low interest)
• extend the end of the term of the loans made in Greece of 28.3 to 32.5 years.
• other long-term measures

The library will, therefore, interest and time limits, not on the amount to be paid by money order. This keeps on.

To Bloomberg, the source of the German ministry of Finance said only that the Eurogroup is waiting for what the ESM proposes to "improve the management of the debt in Greece," and that this proposal touches on the needs of long-term financing.

get Back in the lap of ECB

The interest of the Greek debt to 10 years (those that serve as reference) of around 6.5% in the secondary market, currently. Although they are still at very high levels and very far from a measly 0.3%, and charged to Germany have been falling in recent times.

The fact that the Greek prime minister, Alexis Tsipras, to be the show some adaptation to the requirements of the rescue is to help this improvement. And some economic data also: Greece is growing for two consecutive quarters. Between July and September, the GDP grew by 0.5% compared to the second quarter, and grew by 1.5% yoy.

The european commissioner for Economic Affairs, Pierre Moscovici, has been shown to be favorable to the debt relief. The president of the European Central Bank has “serious concerns” about the sustainability of the same, but also assumed that it is in the interest of the country and the entire euro zone to find a “lasting solution” to the problem

And a colleague of his, Benoit Couere, said to Reuters that the ECB believes that the country is able to have a surplus the primary difference between revenues and expenses, excluding interest – 3.5% even after the rescue, that ends in 2018. Provided that there is the right mix of policies and debt relief. the This is seen as a vote of confidence that could culminate in the inclusion of the country in the program of buying bonds of the European Central Bank.

on The Bloomberg, an official of the ministry hellenic Finance said that inclusion in the program of purchase of debt on the ECB would be able to happen already in February or march. It is expected that before, up until Christmas, the country already has set up with creditors a compromise on the debt.

A change in the rules would be, for Greece, the icing on the cake. The investment of the ECB in the debt of the countries have given particular way to Portugal (with a debt of 133% GDP) to be able to finance the fees very acceptable in the market. The minister of Finance, Mário Centeno has argued the discussion that the interest of Athens, of the eye also in the Portuguese case for the country to have also a reduction in the rate of interest pay for your debt.

Arm-of-iron with the IMF

However, there is the IMF. On the side of the cons. The Fund, headed by Christine Lagarde esteem, on the contrary, that if the goals of the primary surplus Greek are not revised downwards, the country does not have another choice but to re-cut the pension (it is still "too high") and lower the threshold of tax exemption. This and other measures that provides for 2019, after the redemption end. the In money, we are talking about cuts of 4.2 billion euros.

Forecasts are forecasts, they have a sense of the future, but can press on the present. The meeting this Monday is not expected to be definitive and in a couple of weeks the Finance ministers of the euro area can meet again.

it is Certain that the tray forces the european is far to lean for balance. When Athens can finally see some light at the end of the tunnel, this may not help.