ECB’s Coeure: Strong, credible debt measures essential after Greece exits programme

Strong debt relief measures are essential in order to boost the confidence of capital markets in Greece’s economy after the Greek programme ends in August, European Central Bank (ECB) Executive Board member Benoit Coeure said on Friday, in a press conference after the Eurogroup meeting in Sofia.

According to Coeure, this was one of three “take-aways” from Friday’s discussion, the others being the need to complete the fourth review on time and set up strong post-programme arrangements.”

“Last but not least, strong, credible debt measures are an essential part of it: the more front-loaded they can be, the more automatic they can be, the less conditional they can be, the more they will contribute to the confidence-building measures between Greece and capital markets,” he said.

Completing the fourth review on time was an “utmost priority,” Coeure said, noting that the discussions must proceed quickly and reach a swift conclusion when the institutions’ teams returned to Athens on May 14 “as there is still quite some work to be done.”

“As far as the ECB is concerned, our full priorities within the financial sector part of the programme are related to household insolvency, they are related to electronic auctions, where we have seen good progress but still more remains to be done. They are related also to non-performing loans and, surprisingly, they are related to out-of-court [settlements]. These are the four aspects on which we focus very much,” the ECB official said.

Regarding the post-programme arrangements, he noted that this was entirely a decision for the Greek government to take but the ECB’s message was “the stronger, the better” against a backdrop where Greece does not have investment-grade rating from credit rating agencies.

“One very simple way to put it is that starting on August 21, the day after the programme ends, and if Greece opts for a clean exit from the programme which is what the Greek government wants to do, then what has been so far been a conversation between the Greek government and the institutions and the Eurogroup will become a conversation between the Greek governments and capital markets, which is a quite different discussion. So, the stronger they are the better. The growth strategy which the Greek minister has explained is part of the confidence-building exercise, but strong post-programme arrangements will also be part of it,” he said.