The Euro Working Group of eurozone finance ministry officials will on Thursday decide on the disbursement of the next bailout loan tranche to Athens, amounting to 3.3 billion euros, under the cloud of political turmoil created within the Greek government by the decision to shut down and reopen the Greek state broadcaster.
On a technical level Greece has fulfilled all prior actions required, but the eurozone has sent a clear message that if government stability is in doubt the disbursement of the tranche would be delayed.
The representatives of Greece’s creditors left Athens on Wednesday to participate in Thursday’s EWG meeting in Rome. They will head back to Greece after that. If all goes well on a political level, negotiations will resume on Monday.
The heads of the troika – i.e. the heads of the mission of the European Commission, the European Central Bank and the International Monetary Fund – were scheduled to travel to Rome to participate in the EWG, where, according to government officials, the meeting will explore the issue of the funding gap Greece will face by the end of 2014, amounting to 4.6 billion euros.
Talks will particularly focus on Greek state bonds held by national central banks of the eurozone, which, according to a decision of last December’s Eurogroup, were not to be repaid upon maturity but after 2016. This would have allowed the eurozone to have a large part of its funding program for Greece covered by allowing Athens to delay payment to bondholders. However, that decision was never applied and in the last couple of months the Greek authorities along with the Eurogroup have been working to find a solution to the problem that has arisen.
Had the decision been applied, Greece would have avoided the payout of 2.1 billion euros this year, 2 billion in 2014, 1.5 billion in 2015 and 851 million euros in 2016. Now it has paid out 1.8 billion euros and will have to find other sources of funding in order to plug the hole created.