Talks on the European Union budget ended without agreement on Friday but Greek Prime Minister Antonis Samaras appeared hopeful that a Eurogroup meeting on Monday to discuss Greece’s debt sustainability would be more productive.
Samaras told journalists he felt encouraged by the discussions he had in Brussels at the sidelines of the budget talks. “We have stopped hearing people saying it is just Greece’s fault,” he said. “We now have some strong supporters. The talks will go on right up to the last minute.”
Eurozone finance ministers are due to hold a teleconference on Saturday to resume their discussion on how to handle the Greek problem after a failed Eurogroup that ended on Wednesday. German Chancellor Angela Merkel and Eurogroup chief Jean-Claude Juncker expressed confidence that a solution would be found on Monday.
Kathimerini has seen the data that eurozone finance ministers were studying during their meeting earlier this week and it suggests that regardless of any debt restructuring, Greece will continue to need 8.4 billion euros to cover its financing needs until 2016. It also pinpoints that there is a need to find another 10 billion euros in order to ensure Greek debt is at 124 percent of GDP in 2020 rather than 144 percent if no action at all is taken.
There are several proposals on the table in order to reduce Greece’s debt by 40 to 45 billion euros by 2020. The key element to this is a bond buyback scheme, whereby Athens will be lent about 9 billion euros to repurchase its own notes at an estimated 35 percent of their nominal value. This would lead to a debt reduction of about 18 billion euros.
A reduction of 0.9 percent on the interest rate on 53 billion euros in bilateral loans made to Greece as part of the first bailout would reduce the country’s debt by about 4 billion euros. The European Central Bank returning the gains it has made from buying Greek bonds on the secondary market would save about 5 billion euros. Another billion could be saved by the European Financial Stability Facility waving its fee on loans to Greece.
Samaras also appeared relatively pleased with the course of negotiations on the EU budget, suggesting that the cohesion funds available to Greece had been increased by 20 percent from the initial figure of 11.2 billion euros, which is substantially down on what Greece received as part of the last support package because the new one is calculated on GDP figures from 2007 to 2009, when the Greek economy had yet to fall into deep recession.