Greece is back, hat in hand, in need of more money to service its loans, and last night in Brussels the Tsipras government agreed to a deal that will disburse, in two installments, 10.3 billion euros in loans from its international creditors.
Eurozone finance ministers did agreed on debt relief for Greece, extending the repayment period and capping interest rates, but only after the 2018 German elections…and on condition that Greece pass more reforms and cost cutting measures. The deal is obviously a compromise intended to buy time, and kick the Greek can down the street just a little bit longer.
The Greek government owes more than €300 billion, or approximately 180%, of its GDP and needs quick cash to meet debt repayments due in July.
Zerohedge summarizes the “breakthrough” deal…
EUROGROUP MEETING ENDS, DEAL ALLOWS LOAN DISBURSEMENT
EU DIJSSELBLOEM: REACHED FULL STAFF LEVEL AGREEMENT ON GREECE
DIJSSELBLOEM: ESM TO APPROVE E10.3 BLN IN SEVERAL DISBURSEMENT
DIJSSELBLOEM: INSTITUTIONS TO HAVE FINAL CHECK ON LEGISLATION
DIJSSELBLOEM: NEED TO MAKE SURE GREECE STAYS ON FISCAL PATH
DIJSSELBLOEM: AGREED ON METHODOLOGY OF GREECE DEBT SUSTAINBLTY
DIJSSELBLOEM: ASKED ESM TO LOOK AT MEASURES IN DEBT REPAYMENTS
DIJSSELBLOEM: DEBT MID-LONG MEASURES INTO EFFECT JULY 2018
DIJSSELBLOEM: SMP, ANFA PROFITS ALSO PART OF DEBT DEAL
DIJSSELBLOEM: UNUSED ESM FUNDING COULD BE USED TO SWAP GR DEBT
DIJSSELBLOEM: AGREED ON MECHANISM FOR DEBT MEASURES IN L-TERM
DIJSSELBLOEM: IMPORTANT THAT IMF ON BOARD WITH GREECE
DIJSSELBLOEM: IMF TO RECOMMEND NEW PROGRAMME FOR GREECE BY YR END
DIJSSELBLOEM: BUT IMF WILL DECIDE ON NEW DEBT SUSTAINABILITY
DIJSSELBLOEM: DEBT RELIEF WILL BE DELIVERED AT END PROGRAM
MOSCOVICI: GREECE SHOWED POLITICAL RESPONSIBILITY
MOSCOVICI: ESSENTIAL THAT IMF REMAINS IN GREECE PROGRAM
MOSCOVICI: GREECE WILL BE ABLE TO REPAY STATE ARREARS NOW
REGLING: LOAN TRANCHES LINKED WITH GR PROGRAM IMPLEMENTATION
REGLING: FIRST GREECE LOAN TRANCHE OF E7.5 BLN IN JUNE
REGLING: SECOND LOAN TRANCHE TO BE GIVEN IN AUTUMN
REGLING: GREECE NOW TO IMPLEMENT OUTSTANDING PRIOR ACTIONS
The short summary: Greece has promised to implement even more Draconian measures (which may or may not happen) in order to get money that was already promised to it, while the Eurogroup disburses just enough cash to cover the immediate funding needs of the creditors with a little left over to pay for government arrears while demanding even more austerity; future tranches may or may not be paid out if Greece complies with its promises (which will not happen) and meanwhile the Eurogroup says it may someday provide debt relief, once Greece ends its bailout program…which will never happen.
Newsbomb.gr calls the deal a clear slap and burn for the Tsipras government…
The decision of the Eurogroup signalled a collapse in the Tsipras – Kammenou government narrative that the harsh austerity measures enacted by Syriza early on in it term, will act as a counterweight to alleviate the unsustainable debt when the Eurogroup meet.
Schaeuble’s desire, which eventually prevailed, was that any initiatives should not be implemented until after 2017, i.e. after the German elections.
The German Minister of Finance is against any decision on debt restructuring being brought to the floor of the German parliament before the German elections…knowing full well that it will be very difficult to convince the average German voter to support easing the financial burden of Greece.