Eurogroup welcomes completion of most prior actions by Greece

The Eurogroup gave the green light on Monday for the disbursement of the fourth tranche of the European Stability Mechanism (ESM) program for Greece, totaling 6.7 billion euros, following a meeting of the Eurozone’s finance ministers in Brussels.

The Eurogroup said the funding will be paid out in two tranches, the first of which (5.7 bln euros) will be disbursed on February to cover Greece’s debt servicing needs, clear State arrears and support the build-up of the country’s liquidity buffer.

“Following the full implementation of the prior actions and subject to the completion of national procedures, the ESM governing bodies are expected to endorse the supplemental MoU and approve the disbursement of the fourth tranche of the ESM program,” it said in a press release.

“The fourth tranche under the ESM program amounting to 6.7 billion euros will be disbursed to Greece in two disbursements, starting with a first disbursement in February of 5.7 billion euros to cover debt servicing needs, to allow the further clearance of arrears and to support the build-up of the cash buffer of the Greek State, in order to support Greece’s return to the market. The subsequent disbursement for arrears clearance may be approved by the EWG in Spring, subject to a positive reporting by the European Institutions on the clearance of net arrears using also own resources and a confirmation from the European institutions that the unimpeded flow of e-auctions has continued,” it added.

In its assessment on the third program review, the Eurogroup welcomed the adoption of most of the required prior actions, noting that Greek authorities have adopted the 2018 state budget which is compliant with the agreed primary surplus target of 3.5 percent of GDP.

The European institutions’ compliance report also showed that the Greek authorities have over-achieved the fiscal targets set over the last three years (2015-2017), have continued to strengthen tax collection through the Independent Authority of Public Revenue and enhanced the fairness and effectiveness of the social welfare system.

It found that the business environment has been improved by further actions aimed at opening up regulated professions, improving the investment licensing system, lifting regulations that unnecessarily restrict competition in product markets as well as the opening-up the energy markets. “Progress in the framework supporting NPL resolution was achieved through further actions related to the effective operationalization of the out-of-court workout scheme and the start-up of electronic auctions,” it said.

The Eurogroup reiterated the importance of an “ambitious comprehensive growth strategy with strong ownership” from the Greek authorities.

“The authorities are invited to finalize it in cooperation with the institutions well before the end of the program,” it added.

Greece now has to complete the remaining prior actions “as a matter of urgency”, an action that will be verified by the EuroWorkingGroup (EWG). “This will include an assessment to confirm that a continuous and unimpeded flow of electronic auctions is ensured as well as the completion of government pending actions in the field of privatization,” the Eurogroup said.