EU structural funding may partly finance a third bailout

The government is reportedly planning to use European Union structural funds to cover part of any fiscal shortfall and new financing of 4 billion euros for the 2015-16 period in a bid to avoid the adoption of new revenue-collecting measures.

The troika is due to conduct an important assessment of Greece’s progress in September. So far, it has it has been agreed that the EU will provide 95 percent of investment subsidies for the National Strategic Reference Framework (NSRF) for the 2007-13 period, and official announcements are expected in the next few days. The Finance Ministry is proposing that this rate be maintained in the new NSRF for the 2014-20 period. In this way, the government will be able to meet any financing shortfalls thanks to its lower contributions to NSRF investments. Officials say that the response of EU departments so far has not been negative.

In this context, Wednesday’s mention by visiting European Central Bank executive board member Joerg Asmussen that the eurozone will look into additional support measures for Greece, including a further reduction of the interest rate on bailout loans and jointly financed investment programs, is not seen as coincidental.

An article in Germany’s Sueddeutsche Zeitung on Wednesday contained a similar reference, saying that the third aid package to Greece which German Finance Minister Wolfgang Schaeuble mentioned on Tuesday will be funded, at least in part, from the EU budget.

Asmussen, nevertheless, stressed that any discussion on the Greek debt issue cannot reopen before April next year, by which time it will be known whether Athens achieved a primary surplus for 2013 – a basic precondition for any additional measure for making Greek debt viable.

Separately, Economic and Monetary Affairs Commissioner Olli Rehn also did not rule out a third bailout program on Wednesday. In statements to Finnish newspaper Helsingin Sanomat, he said that after the troika’s assessment of Greece’s progress in the autumn, “we shall re-examine possible ways for continuing the financing of the Greek bailout program.” “For instance, the viability of debt may be improved by prolonging the repayment period,” he added.