German approval and praise come at key time

The German parliament on Thursday provisionally approved a precautionary credit line for Greece, set to apply from March 1, 2015, on the condition that the inspection by the country’s creditors is completed on time.

Finance Ministry officials in Athens responded to the news saying that it constitutes a tangible acknowledgement of the progress that Greece has achieved. However both Chancellor Angela Merkel and her finance minister, Wolfgang Schaeuble, were quick to note that despite Greece’s progress over the past two years, the country still has a long way to go.

“The parallel approval of the precautionary credit line and of the two-month technical extension to the program goes beyond the Eurogroup decision on December 8 and constitutes a tangible acknowledgement of the progress of the Greek economy,” a Greek ministry statement read on Thursday.

Merkel stated that “although there is still plenty left to do, prospects in Greece are considerably better today than two years ago,” and that “all this would not have been possible without the decisive and common action of solidarity on a European level.” Schaeuble added that “Greece still has a tough road ahead,” before conceding that “it is in a better state than some people thought, it is on the right track, but must continue with reforms and raise its pace.” He commented that “the credit line is the right instrument for Greece” and that “the approval of the program’s extension is a significant message to Greece at a crucial moment.”

The Greek Finance Ministry stated that the approval by the Bundestag “offers a roadmap toward a successful and sensible exit from the adjustment program and the start of a new, more flexible relationship with the country’s European partners.”

The credit line approved is conditional on Greece’s return to the money markets, but that appears impossible at this stage due to prohibitive interest rates in the secondary bond market.