Key troika decisions to be postponed

Eurozone policymakers have put off decisions on covering the funding gap of the Greek program until December and lightening the Greek debt load until after April, a senior European Union official confirmed on Tuesday.

The same official said that there are two conditions for covering any gap in funding that may emerge from mid-2014 after the disbursement of the last installment of the bailout. The first is the completion of an assessment by the inspectors of the troika – i.e. the European Commission, the European Central Bank and the International Monetary Fund – and the approval of the 2014 budget in order to determine the precise size of the funding gap. The second is the completion of ongoing stress tests on local banks in order to establish whether they will need any additional funding to strengthen their capital or whether there will be some funds left over from the 50 billion euros set aside for the Hellenic Financial Stability Fund (HFSF).

The key date ahead is December 9, when the Eurogroup council of eurozone finance ministers convenes in Brussels, though the same official predicted some “interesting discussions” regarding Greece in the two Eurogroup meetings scheduled for next month.

The same source told reporters that the execution of the Eurogroup decision last November for a lightening of the Greek debt once the country produces a primary surplus has been postponed until after April 2014, as “that is when Eurostat will confirm whether the 2013 budget has closed with a primary surplus.”

Next Monday’s Eurogroup meeting in Luxembourg is therefore not expected to produce any significant decisions on Greece. The green light for the disbursement of the remainder of the July tranche, amounting to 1 billion euros, will not be given by the Euro Working Group unless Athens has previously fulfilled all the prior actions required.

“The heads of the troika’s inspection teams will only return to Athens once Greece’s compliance has been evaluated at a technical level,” the same senior EU official stated.