- Dijsselbloem says Greece needs to finish financial milestones
- Greece asked to pass measures on non-performing loans
Greece could receive 10 billion euros ($10.8 billion) for bank recapitalization as soon as next week if it can complete its financial-sector milestones on time, euro-area finance ministers said after a meeting in Brussels Monday.
The so-called Eurogroup asked Greek authorities to finalize financial-sector measures and legislation agreed under a set of milestones this week, according to a statement. That would unlock the disbursement of 2 billion euros by the European Stability Mechanism “and a transfer of funds needed for the recapitalization of the Greek banking sector.”
ESM chief Klaus Regling said the banking sector milestones are now on track to wrap up soon, paving the way for the transfer. The banks’ 10 billion euros “can be made available to Greece relatively quickly, but only after the conditions are met,” Regling told reporters in Brussels after the meeting. “We hope that this can happen in the course of this week.”
Jeroen Dijsselbloem, the Dutch finance minister who leads the Eurogroup, said Greece was making good progress toward unlocking both the bank money and its next slice of general aid funds. He said if Greece can take the necessary steps this week, finance ministry deputies can meet next week and consider the payouts.
The two important issues to be resolved are about the governance of the banks and household insolvency, Dijsselbloem told reporters at the press conference. “That’s the process that we have outlined for the coming days, and we’re all committed to get that done in time.”
Finance ministers met Monday to review the implementation of Greece’s latest bailout program and whether the nation is meeting the milestones needed to disburse aid and recapitalize its banks. Failure to meet those requirements could put the solvency of the sovereign and of its financial system in doubt.
“There’s been some delay but most people are very pleased that we’ve done so much work so quickly in such an organized manner,” said Euclid Tsakalotos, the Greek finance minister after the meeting. “We’re a bit pressed because as you know the recapitalization is going faster than we thought, so in that sense we’re a victim of our own success because the banks need to be recapitalized a bit earlier, and so some of the issues that we could have sorted out later we have to sort out earlier.”
Greece must pass insolvency laws for the recapitalization of banks and present proposals for the creation of a privatization fund, German Finance Minister Wolfgang Schaeuble told reporters. “From the points Greece has committed to implement as a condition for the payment of the first tranche, a large part hasn’t been met yet,” Schaeuble said before the meeting began.
Housing foreclosures are “the most sticky point” because it affects social welfare and also the health of the banks, which need cash and should avoid “moral hazard” situations, Maltese Finance Minister Edward Scicluna said before the meeting.
The Greeks are seeking a system that would shield about 70 percent of homeowners from foreclosure, according to two European officials. Auditors from the International Monetary Fund, the European Commission, the European Stability Mechanism and the European Central Bank say the Greek limit is overly generous and are seeking a stricter framework that would only cover the most vulnerable.