Eurozone official: Solution on Greece can be reached before end 2016 if all sides are willing

A comprehensive solution for the Greek issue was possible before the end of 2016 provided all sides demonstrated the necessary will to reach an agreement, a Eurozone official said here on Wednesday.

The Eurogroup on December 5 would mainly focus on the negotiations for the Greek programme, the official said, noting that “very significant progress has been made in recent days” and reporting a cooperative atmosphere in the talks. An agreement had not yet been reached, the official clarified, because a small number of issues had yet to be settled.

With respect to fiscal issues, the official said that differences regarding 2018 were small but expressed the opinion that issues linked to the labour market would not be resolved on a staff level but at a higher level.

If only one issue that was “politically sensitive” remained unresolved by Monday, the Eurozone official expressed certainty that this would then be discussed at the Eurogroup. “I do not see any major problem there and I am confident that, if all sides are willing, we will be able to complete the review within 2016,” the official added.

The official said that the European Stability Mechanism (ESM) will present Eurozone finance ministers with a package of short-term measures that can be used to alleviate Greek debt up in the run up to 2018. Some will have to be implemented earlier, for example at the start of 2017, while others can be left for later and this will be among the issues that the Eurogroup will discuss, the official added.

Regarding medium- and long-term debt relief measures for Greece, the same Eurozone official noted that there was no reason to discuss these now, since they will be implemented after the end of the Greek programme.

The official explained that a staff-level agreement required an agreement between the four institutions taking part in the talks – the European Commission, European Central Bank (ECB), ESM and the International Monetary Fund (IMF) – and the Greek authorities. The Debt Sustainability Analysis (DSA), in turn, required a staff-level agreement since only then would there be a clearer picture of Greece’s fiscal progress.

The official refused to elaborate regarding the disagreement between European institutions and the IMF concerning the sustainability of a 3.5 pct of GDP primary surplus target after 2018 but did not rule out the possibility of an emergency Eurogroup meeting in December, noting that the time schedule was “flexible” though nothing was planned. IMF Managing Director Christine Lagarde will not be attending next Monday’s Eurogroup, the official added.