Centeno points to credit line
Eurogroup President Mario Centeno told the European Parliament on Wednesday that Greece ought to assess and utilize all the mechanisms and tools at its disposal, thereby retabling the precautionary line of credit, as this is one of the instruments available.
He did clarify that the precise arrangement at the point of exit from the bailout program in August rests with the Greek government, echoing the view expressed by European Central Bank President Mario Draghi when asked about the possibility of another program for Greece.
Centeno’s remark came two days after Draghi expressed concern at the Eurogroup meeting about Greece’s full return to the markets and the rise in bond yields, which drew a strong reaction from Finance Minister Euclid Tsakalotos. Speaking at the European Parliament, the Greek official was again adamant against the line of credit.
The government opposes such a solution as it would entail a new agreement, canceling its rhetoric about a “clean exit.” All European officials who have spoken on the issue have stressed that for a credit line to be discussed, the government would first have to ask for it. Eurozone sources argue that several other European governments would rather avoid the credit line as it would require the approval of national parliaments. However, the experience of rising Greek bond yields, which continued on Wednesday, may have led to second thoughts.
Centeno cited the example of Portugal, which achieved a clean exit and of which he is finance minister, saying that “ownership” of the fiscal policy and reforms is key. He also stressed the significance of full market access through creating a cash buffer and maintaining political stability.
Tsakalotos argued that a credit line not only fails to provide credibility, but also delivers the opposite message to markets, that the eurozone does not trust Greece. He added that he considers it a substitute for and not a supplement to the cash buffer. There is no sense in having both, he stated.