With hard work there could be an overall ‘package-agreement’ on the review of Greece’s programme, the role of the International Monetary Fund and the country’s debt at the Eurogroup meeting on May 24, Eurozone sources said here on Thursday.
The sources noted that the institutions were expected to announce the conclusion of a staff-level agreement within the next few days so that there was an agreement in principle for the disbursement of loans at the May 24 Eurogroup meeting. The disbursement of the loans would then require the approval of five national parliaments after which, in the space of at the most two weeks, the European Stability Mechanism (ESM) board would disburse the loan tranches some time in June, the sources added.
On the IMF’s participation in the programme, the Eurozone sources noted that the working hypothesis was that the IMF would remain, since its involvement in the Greek programme in some way was also a requirement set by five member-states. They noted, however, that a new IMF programme with Greece was not practically possible before the end of the summer.
Regarding the prospect of Greece attempting to borrow from international markets before the conclusion of the programme in the second of half of 2018, the sources said that the country could “test the waters” with smaller-duration bonds as early as 2017, noting that this had been successfully attempted in 2014.
In a comment on Greece’s ability of sustain high primary surpluses of at least 3.5 pct of GDP after 2018, the same sources said this feasible, pointing to similar examples in other countries, such as Belgium, Ireland and Italy.
They said a proposal that the ESM buy the Greek debt held by the IMF had encountered “difficulties on a political level,” while noting that political agreement would be needed in order to the ESM to give profits on Greek bonds back to Greece.