Eurogroup may put off tranche decision


The chances that the 1-billion-euro tranche will be disbursed to Greece are diminishing, as this Monday’s Eurogroup is not expected to grant its approval, given that the Greek government has not completed all the necessary reforms, according to a eurozone official who spoke to reporters on Thursday.

Although that amount is not immediately required by Athens, the delay in its disbursement because of the inactivity of the Greek government does not send a positive message to the markets regarding the course of the economy, at a time when Greece is keener than ever to prove its return to normality, especially after this week’s 10-year bond issue.

Monday’s decision by the eurozone finance ministers will depend on how many pending prior actions the government implements.

The same eurozone official noted that “the Commission report shows that not all prior actions have been implemented, there are still a few days left and we will see on Monday how far we have got.”

The main issue that remains unresolved is the law for the protection of debtors’ primary residences, as up until Thursday there was still no agreement in place between the government and its creditors.

“It’s still too early to tell definitively there will be no decision, but I consider it very likely there will not be,” the official added.

The agreement on the framework to succeed the Katseli law ranks very high on the creditors’ agenda, as that will determine the sustainability of Greek banks. Greece remains the country with the highest bad loan rates in the eurozone, at about 45 percent.

The eurozone official expressed the creditors’ concern over the fiscal issues in Greece, focusing on the recent hike in the minimum wage, which that he called “high.”

He added that such increases create doubts about the reduction of unemployment, and stressed that “if there are many gaps on Monday, the ministers will save their decision for later.”

No Euro Working Group meeting will be called before Monday’s Eurogroup on the Greek issue, “unless there are very strong indications of very significant progress in open issues.”