New greece package moves closer

New greece package moves closer

This was announced by the president of the eurogroup, jean-claude juncker, on wednesday evening. Greek finance minister evangelos venizelos said on television that his country had now met all the conditions set by the international lenders.

After consultations with euro finance ministers, juncker said he was confident that "all necessary decisions" could then be taken. There has been significant progress towards the new package, he said. The euro finance ministers had cancelled a special meeting planned for wednesday evening due to an initial lack of progress and instead reached an agreement in a telephone conference lasting around three hours.

"Based on the components that are currently on the table (…), i am confident that the eurogroup will be able to take all the necessary decisions on monday 20. February," wrote the luxembourg premier. February meeting of ministers has been planned for a long time.

Since tuesday there had been considerable progress. So the euro partners had received strong commitments from the heads of the two rough parties carrying the coalition government in athens. There is also more clarity about the additional savings of 325 million euros, which the euro countries had demanded from greece as one of the preconditions.

Further consultations are needed to ensure that the implementation of the austerity programs can be monitored. It must also be ensured that debt servicing is a priority. In this context, a special account for the repayment of loans was discussed at a previous ministerial meeting. According to venizelos, most of the problems have been solved after the telephone conference with his colleagues in office. Some "technical issues" still needed to be clarified.

Juncker also said that the "troika" of the EU commission, the european central bank (ECB) and the international monetary fund (IMF) had completed their report on greece’s so-called debt sustainability. This is about the demand by international lenders that athens reduce its general government debt to 120 percent of economic output by the end of the decade, from around 160 percent at present. A maximum of 60 percent is permitted.

In the meantime, the greek government is working through the list of demands from the international lenders – the "troika" – in three steps. On wednesday, the leaders of the two governing parties gave the required assurance to keep savings promises even after the elections in april. Socialist leader giorgos papandreou has given assurances that the austerity program will be implemented and will remain in place after the new elections, according to the socialist office.

At the same time, the leader of the conservative party nea dimokratia (ND), antonis samaras, also declared his support for the austerity program in a letter to the eu and the european central bank. Samaras, however, also stressed his commitment to changes that demand growth.

Athens has thus been able to tick off another important condition for the billions in aid. The previous evening, the council of ministers had decided to bring together the requested additional savings of 325 million euros through cuts in the budget of various ministries and especially pensions.

The eu commission had previously called for speed. "Time is running out," said spokesman for truth commissioner olli rehn.

It remains to be seen when the memorandum of understanding with private creditors such as banks and insurance companies on a debt cut will be announced. Venizelos said he hoped this could also be the case on monday.

The government debt is expected to fall by around 100 billion euros with the cut. A basic agreement is said to already exist, although the ausmab is open. According to federal finance minister wolfgang schauble, negotiations are well advanced. Rehn’s spokesman said, "private sector participation is a major operation, it takes time."

Earlier, bundesbank president jens weidmann had given a clear rejection to a direct participation of the central banks in a voluntary debt cut, but had not explicitly ruled out talks about a further sale of the greek bonds on the ECB books. "The crucial point is that we are not allowed to renounce demands on a state. This would be a form of monetary state financing," he told the "handelsblatt". The talk is that the ECB could pass the bonds on to the EFSF bailout fund at a purchase price well below their nominal value.

Calls grow in eu parliament for more growth initiatives for greece – instead of "saving the country to pieces". The social democrats want to send their own "troika" of parliamentarians to greece to discuss an alternative program with government representatives and trade unionists. It should include proposals to boost the economy and create jobs.

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