ECB waiting for measures that will make Greek debt sustainable long-term, says Draghi

The European Central Bank (ECB) is waiting for the measures that will make Greek debt sustainable in the long-term in order to decide on Greece’s participation in the quantitative easing program, central banker Mario Draghi said on Monday, testifying at the European Parliament’s Economic and Monetary Affairs Committee in Brussels.

Draghi said the central bank and its governing council need the sustainability report to evaluate it independently and expressed regret that the last Eurogroup wasn’t able to clearly specify the debt relief measures that will be adopted.

Responding to a question by independent MEP Notis Marias on the bank’s quantitative easing program, Draghi said that “if and when” the program is extended to Greece, some Greek businesses could be included in the company bond buying program, if they fulfill the relevant criteria.

In his reply to European Parliament Vice-President and SYRIZA MEP Dimitris Papadimoulis, he noted that the EU member-states and the IMF “were at the point where the two sides must reach an agreement,” and that this was “the only thing needed at this time.”

He warned, however, that the extension of quantitative easing to Greece should not be considered a given and that the ECB will have to carry out its own independent assessment based on adverse scenarios, which would be fully independent of the debt sustainability reports of the both the IMF and the European Commission.

Asked by main opposition New Democracy MEP Giorgos Kyrtsos about the state of Greek banks, the central banker said there had been “exceptional progress” in Greece’s banking sector and especially in the capitalisation of Greek banks, which was currently “multiple times” what it had been. At the same time, he pointed to the persistent problem of non-performing loans, which he said was due to the crisis and the banking sector’s previous weaknesses. The issue of NPLs was being addressed as part of the current review of Greece’s current programme, Draghi said.

He also referred to the terrorist attack on former Greek premier Lucas Papademos in Athens, saying that Papademos had been an “excellent ECB vice-president and prime minister,” as well as a personal friend.

“On behalf of the staff and the board of the ECB, I would like to express by solidarity and sympathy,” he said.