Quick breakthrough at Brussels Group looks unlikely

Greece’s hopes of an emergency Eurogroup being called as early as Monday to confirm the progress in Brussels Group talks, and thereby possibly prompting the European Central Bank to allow Athens to issue more treasury bills to relieve its liquidity problem, appear to be misplaced.

Several European Union officials have told Kathimerini that it is unlikely eurozone finance ministers will be in a position to discuss the state of negotiations at the beginning of the week. Greece’s lenders insist that there must be a staff-level agreement on the range of measures being demanded in return for 7.2 billion euros in bailout funding before the matter can be referred to the Eurogroup.

Athens, though, hopes that there can be an initial agreement on a bare minimum of reforms that would prompt the ECB to increase its 15-billion-euro ceiling on the level of Greek T-bills that can be issued and allow local banks to increase their exposure to this form of debt.

The first two days of the Brussels Group deliberations, which began on Thursday, confirmed that there is a substantial distance separating Greece and its lenders. For instance, they differ on macroeconomic projections. Athens still believes growth this year can reach 1.2 to 1.4 percent and that this would lead to a primary surplus of 1.2 percent. Creditors see these projections as extremely optimistic.

Also, Athens is willing to go ahead with some but not all of the privatizations planned for this year, bringing in projected revenues of 1.5 billion euros, which the institutions also see as being overestimated. The target for revenues from sell-offs this year had been 2.2 billion euros.

The government looks set to keep the single property tax (ENFIA) this year despite its election pledge to scrap the highly unpopular levy, but there is still a disagreement over the value-added tax increase being demanded by creditors. The institutions believe that between 2 and 3 billion euros of new fiscal measures will be needed this year for Greece to hit its targets.

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