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Important negotiations between Greece and the European Central Bank

21 August 2013 / 11:08:18  GRReporter
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Three of the five key topics on the agenda of today's meeting of Greek Finance Minister Yiannis Stournaras and Joerg Asmussen, a member of the Board of the European Central Bank, who will come on a special visit to Greece, include a reduction of public debt, the financial deficit and the likelihood of new measures by 2016.

Sources from the Ministry of Finance emphasised for Naftemboriki newspaper that Asmussen’s visit has no official character, i.e. no decisions will be taken.

However, views on all matters of the Greek programme will be shared and, of course, the subject for a further alleviation of the debt will be discussed.

The Greek side will also get a clearer picture of the intentions of the supervisory Troika, which is expected to visit Athens a week earlier than expected, i.e. immediately after the elections in Germany on 22 September.

The agenda

The agenda for today’s meeting between Stournaras and Asmussen, although an informal one, will include the following specific topics:

- Ways to ease the Greek debt, so that it could be reduced with more stable steps from 176% of GDP, which is the amount it is expected to reach this year, to 110% of GDP in 2024.

It is believed that Asmussen will have a clearer idea of the timing and conditions under which such a discussion can start.

- Covering the funding gap for the period 2014-2015, amounting to 10.9 billion euro, which was mentioned in the last report of the International Monetary Fund. On this issue the European Central Bank may have an opinion.

- The possible package of new measures that are estimated at 5.6 billion euro for the period 2015 -2016.

The Greek Finance Minister insists that the need for new measures will be much less. On the other hand, so far Asmussen has acted as a fanatical supporter of massive reforms.

- The transformation of the Greek banking system after the recapitalization of banks.

It is expected that the representative of the European Central Bank will pay particular attention to the review of business plans of systemically important banks, as well as the attempt of "privatization" of Eurobank.

- The political stability and the willingness of both parties supporting the Greek government to proceed and complete the programme.

This question has been occupying the attention not only of the IMF but of the European Central Bank, too.

Banking Supervision

The attempt for the merger of the banking supervision in the European Union will also be discussed.

Greece is particularly interested in this question, since only in this way can it apply, albeit retrospectively, the measure for the direct rescue of Greek banks through the European Stability Mechanism.

This would ease the Greek debt, which the Greek government borrowed in order to support banks, by 50 billion euro.

Finally, the future of the euro and the development of the Eurozone are also expected to be discussed.

Talks with George Provopoulos and George Zanyas

Sources in the Ministry of Finance identified Joerg Asmussen’s visit to Athens as particularly useful, since, in addition to meeting with Finance Minister Yiannis Stournaras, he will also meet head of the Bank of Greece George Provopoulos and governor of the National Bank of Greece and President of the Association of Greek banks George Zanyas.

A meeting in the Prime Minister's residence Maximou

The main mission of the Greek Ministry of Finance will be the establishment of a medium-term fiscal plan for the period 2013-2017 with no new measures and the fiscal deficit for the period 2013-2014, and a primary surplus (albeit small) by the end of 2013.

Following yesterday's meeting at the Prime Minister's residence Maximou, in a response to a question about future plans for easing the Greek debt, Finance Minister Stournaras said that the basic premise is the achievement of a primary surplus.

In particular, he pointed out that "the decision of Eurogroup depended on the primary surplus, and it is too early to speak of a surplus. “We have some positive signs, but let's wait for the end of the year.”

However Stournaras denied rumours that scenarios for the reduction of the debt were discussed at yesterday's meeting. "No, we did not discuss such matters here. As you know, all ministries have obligations in terms of the programme. These duties are evenly distributed in almost all ministries, and coordination is therefore necessary. This is what we did yesterday", said the Minister of Finance.

Outstanding issues by the end of September

According to sources, during yesterday's meeting at Maximou residence, issues of coordination of all departments were discussed regarding the measures which have to be applied, and the inclusion of the results of each ministry in the general progress of the programme, on which the Ministry of Finance will report.

In particular, it was made clear that the following issues need to be resolved by the end of September:

1. The completion of the draft of the new property tax so that it can be approved by the Troika. Also, the budget should not go beyond the set limits and there should be concrete results in terms of the combat against tax evasion.

2. A plan for the reorganization of the two state enterprises - ELVO (a Greek company producing buses and military vehicles) and EAC (Greek defence systems), and the state mining company LARKO.

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