Germany’s opposition to the creation of additional fiscal space for Greece’s 2020 budget with the earnings of eurozone central banks from their Greek bond holdings (SMPs and ANFAs) is the reason for the apparent delay in the decision on this matter, which has now been put off until next year.
Sources familiar with the negotiations that have started on an informal level say that Berlin has made it clear it would be inclined to discuss the channeling of SMPs and ANFAs toward investments, as the Eurogroup’s decision in summer 2018 provided for, but not in a way that would generate additional fiscal leeway.
This view is also held by at least one section of the country’s creditors, with the argument that the 2018 Eurogroup decision was not meant to create more fiscal space, as that would cause problems in the sustainability of the national debt. Readers are reminded that the June 22, 2018 decision allowed for earnings from SMPs and ANFAs to be used for “agreed investments” instead of the reduction of gross investment needs, as has been the case to date.
Nevertheless, another section of the creditors argues that if those resources are used for public investments, some additional fiscal space will de facto be created.
In any case, the government hopes there will at least be a positive decision about using the resources for investments, regardless of whether they count as extra fiscal space. As one government source notes, the budget has been drafted without taking this leeway into account, so it will be an added bonus if it could be.
The discussion on the matter will formally start after the publication of the conclusions from the fourth post-bailout assessment. A favorable review is required for the disbursement of the approximately 600 million euros from SMPs and ANFAs at the December 3 Eurogroup meeting.
It is expected that the Eurogroup will order the European Commission to negotiate the framework in which these resources may be utilized at the next assessment, in February 2020. Therefore the disbursement of the above amount is expected in the first quarter of next year. The same sources estimate that once a decision is made on this disbursement, it will also apply with regard to the next ones, with a total of 1.2 billion euros due in 2020.