Greece was denied its next bailout tranche of 2 billion euros ($2.1 billion) Monday, after eurozone finance ministers said the country had failed to deliver on a series of reforms necessary to unlock the latest provision of the rescue package.
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A European Central Bank Stress test showed at the end of October that Greek banks needed a total of 14.4 billion euros in additional capital if they were to survive a scenario of adverse economic conditions.
ATHENSGreece is optimistic of a deal with its global lenders by next week on issues now holding up disbursement of aid under a multi-billion worldwide bailout, a government official said on Monday.
Greece must pass insolvency laws for the recapitalization of banks and present proposals for the creation of a privatization fund, German Finance Minister Wolfgang Schaeuble told reporters.
One of the main the disagreements for the Greeks is protection for poorer families in danger of losing their homes as a result of bad loans. Klaus Regling, the head of the eurozone’s bailout fund, noted that the banks’ funding gap had turned out smaller than expected, meaning that “lending to Greece will very likely be less than the up to 86 billion euros initially foreseen”.
“We welcomed the commitment by the Greek authorities that this conditionality will be fulfilled in the course of the week”, the ministers said. The future of banking governance is one matter that has to be sorted out quickly so it doesn’t jeopardize the process of recapitalization, he said.
“The 2 billion will only be paid out once the institutions give the green light and say that all agreed actions have been carried out and have been implemented”, the chairman of eurozone finance ministers Jeroen Dijsselbloem said.
“It is exclusively for Greece to implement what we agreed upon last July”. However, Athens and the Troika of creditors – the International Monetary Fund, the ECB and the European Commission – still need time to finish off the remaining changes.
“That’s good news for Greece because it means the debt increase will be less and also good for ESM as we keep more remaining firepower”, he said. “There is always room for compromise but I don’t think the ministers would accept rules that are much more favourable for people not paying their mortgages than in any other country”, the official said.
EU Economy Commissioner Pierre Moscovici spoke of a positive dynamic between the leftist government of Prime Minister Alexis Tsipras and the country’s creditors, expressing optimism of reaching agreement on the next bailout tranche “in the coming days”.
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“I’m going to Brussels with the spirit that an agreement should be achieved this afternoon”, Sapin said at a press conference on Monday in Paris.
