Eurogroup thaws relief of the Greek debt – the Observer

The Eurogroup unlocked the measures for the alleviation of the public debt of Greece, which froze in the wake of the decision of the Greek government to pay a bonus to pensioners with low income, after Athens managed to persuade the Finance ministers of the euro-that it is a single payment, which will not be repeated.

"With great satisfaction, announce that the path is free to make the decisions relating to the procedures for the measures for the alleviation of the Greek debt in the short term", said the president of the Eurogroup, Jeroen Dijsselbloem, in his account on the social network Twitter.

the measures for The relief of the Greek public debt had already been agreed upon in the Eurogroup, without any pre-condition associated with it. Greece had finished the first revision of the third program with success and that was the only condition required.

even so, the Eurogroup, after a long discussion and technical work, agreed a set of measures that would give relief in the short term to the Greek public debt, all of them without cutting the value of capital in debt and that the European Stability Mechanism (the bailout fund of the euro) would take the cable.

All of this changed when the Greek government, at a time when the opinion polls give a strong advantage to the largest party of the opposition – the center-right party New Democracy in voting intentions, decided to give a bonus to the pensioners.

As the budgetary outcomes had been higher than expected, the Executive Greek says that he would pick up on the surplus and distribute it among those who suffer the most: pensioners. The bonus, a one-time payment of between 300 and 800 euros to pensioners with pensions of less than 800 euros (1.6 million pensioners), despite being paid the title christmas is a single payment.

The Greek government has also decided not to increase the VAT, as it was expected, in the islands of the Aegean sea, very affected by the wave of refugees, and to hire five thousand doctors and nurses to address failures in the national health service Greek.

Who did not like the decision were the creditors of Greece. Shortly after you have approved the measures, the Eurogroup has decided to suspend the measures they had approved just a week before. "The institutions have concluded that the actions of the Greek Government does not seem to be in line with our agreements," said a spokesman for the president of the Eurogroup on Twitter. So "now there is no unanimity to implement short-term measures".

The institutions that make up the troika also published a statement where it criticized the decision, that Alexis Tsipras refused to reverse, noting, however, that if it were a payment isolated, the increase of the expenses – 617 million euros only for the bonus in their pensions – would not lead to a slippage in the targets of the coming years.

And would have been the same this is the argument that convinced the creditors. The bonus does not become a christmas bonus or thirteenth month, and so the support that was approved in early December back in practice.

there is, however, further negotiations on these or other measures for the alleviation of the Greek debt. Relief of the Greek debt long-term will only be discussed after the current program end if it is completed successfully – that is, if the Greece to implement all of the reforms that creditors require, and only if this height is considered necessary. For now it only measures short. And what measures are these?

• The profile of debt payments to the rescue fund european will be smoothed out. That is, the periods in which there are payments concentrates will be changed to that, over the 32 years and average maturity of the loans, the payments are better distributed.
• The countries of the euro will give an increase in interest provided for with respect to a tranche of the loan of the second rescue. This margin, of about 200 million euros, will be charged. That is, are less than 200 million which the countries of the euro (distributed according to their share in the fund will receive.
• The bonds with variable rate, that are worth about 42 billion euro, borrowed by the rescue funds to recapitalise the banks, will be exchanged for bonds with fixed rates and long-term (means that the interest will be more stable, but also that, in the short term, Greece may have to pay more interest).
• The rescue fund will employ swaps to stabilize funding costs order to lend to Greece, which also reduces the costs for Athens, since these are transmitted to the Greek State.
• The financing will be done with recourse to the emission of long-term, and not the trading of bonds and refinancing of current.

The relief provided should, according to the accounts of the president of the European Stability Mechanism, to allow the financing needs of the Greek State lower by about five percentage points each year and that the overall level of public debt down by 20% of GDP.