M. Draghi: Greece must complete second review and have sustainable debt to join QE

A sustainable Greek debt and completion of the second review of the Greek programme are necessary prerequisites for Greece’s inclusion in the quantitative easing, European Central Bank (ECB) President Mario Draghi said on Monday.

Addressing the European Parliament’s Economic and Monetary Affairs Committee in Brussels, Draghi explained that the sustainability of Greece’s debt must be addressed before the ECB can proceed to buy Greek debt.

This required that both the short-term and medium-term measures for easing Greek debt must be in place, he added, in order to enable a reliable assessment of Greece’s debt sustainability. Greece’s Eurozone partners have already given the go-ahead for short-term debt relief measures, which are currently being rolled out, but Greek authorities and Eurozone member-states are still in negotiations over the medium-term measures, he pointed out. Consequently, Draghi added, a reliable assessment of Greek debt sustainability required the completion of the second review.

Once the review was concluded, he explained, the ECB’s board will carry out its own, fully independent assessment of the sustainability of Greece’s debt.

“We can be closer to the goal of buying Greek debt if the second review is completed soon, otherwise we can wait,” Draghi said.

Replying to a question put by Greek MEP Giorgos Kyrtsos of the New Democracy party, the ECB president said that Greece had made significant progress in the negotiations to conclude the review.

“There have been important changes in Greece,” he said, noting that the completion of the review was currently “stuck” on three things: first, there had to be a primary surplus of 3.5 pct for a lengthy period of time, secondly, closing the fiscal gap, and thirdly, a series of structural reforms. Among the last, Draghi added, were those relating to the labour market, justice, the energy sector and management of non-performing loans.

Replying to Communist Party of Greece (KKE) MEP Sotiris Zarianopoulos, meanwhile, Draghi said it was important to have measures to absorb the unemployed and that these were part of the negotiation to conclude the second review.