Reaching a comprehensive agreement on Greece in May 22nd remained a goal, EU official says

Greece and its creditors believe that reaching a comprehensive agreement at a Eurogroup meeting in May 22nd remained a goal, a European Commission official said on Friday.

Speaking to reporters, in Brussels, the official said that a technical agreement reached in Athens between Greek authorities and the institutions included a very ambitious package of reforms and noted that in order to conclude a second review of the Greek program, a total of 140 prior actions should be implemented.

He said that 40 of these actions already have been implemented, while around three-quarters of the remaining 100 prior actions needed to be passed by the Greek parliament as a new law. He noted that Greek authorities have pledged to submit and vote a new legislation next week, around May 16, a move that could help the institutions to make a positive assessment at the forthcoming Eurogroup meeting.

He said that disbursement of a loan tranche to Greece would need around four to five weeks after a political agreement was reached in the May 22nd Eurogroup, while the IMF would need more time to decide on its participation in the Greek program, due to its internal procedures.

The official expressed the institutions’ and the Eurogroup’s satisfaction for Greece’s fiscal overperformance and the achievement of a primary surplus surpassing 4.0 pct of GDP in 2016. He attributed this development to the fact that economic conditions were more positive than expected, some reforms implemented after 2015 began bearing fruit and higher one-off revenue.

He expressed the European institutions’ confidence that Greece will achieve its fiscal goals for 2017 without additional measures and said there was a small gap between 0.2-0.3 pct for 2018. He noted that European institutions did not see the need for further measures in the period 2019-2020 after the end of the program, however they agreed with an IMF demand for an additional package worth 2.0 pct of GDP.

He stressed this agreement was necessary to accelerate completion of the review and added that an additional agreement on a package of counter-measures -including significant social and growth-oriented actions- was also reached.

The European official said a delay in concluding a second review of the program had a negative impact on the Greek economy and said that the European Commission was expected to revise downwards its estimates for economic growth in the country to around 2.0 pct this year from an initial estimate of 2.7 pct.