Greece: Eurogroup Teleconference Outcome; European Stability Mechanism Press Release; Greek Last-Minute Request Rejected

ESM (European Stability Mechanism) press release

Date: 30 June 2015

Luxembourg – The Greek financial assistance programme of the European Financial Stability Facility (EFSF) expires tonight at midnight CET. As a result, the last EFSF loan tranche of €1.8 billion will no longer be available for Greece and the €10.9 billion in EFSF notes to cover the potential cost of bank recapitalisation or bank resolution in Greece will be cancelled.

Klaus Regling, CEO of the EFSF, said: “It is regrettable for Greece that the EFSF programme will expire today without any follow-up arrangement and that the positive results of the programme are put at risk. Due to the economic policies adopted under the EFSF programme, the country was on a good path towards strong growth until the second half of 2014. The many sacrifices which the Greek people had to make were paying off. Greece managed to cut its budget deficit and regain competitiveness. The country was able to access financial markets again and saw its high unemployment start declining. According to the OECD and World Bank, Greece was a reform champion until 2014, with encouraging growth prospects. This trend can continue if the Greek population decides to return to the path of reform within the euro area.”

The EFSF programme started on 21 February 2012. It was originally due to end on 31 December 2014, but was extended twice upon request of the Greek government. In the context of the programme, the EFSF disbursed €141.8 billion to Greece. It included €48.2 billion to cover the costs of bank resolution and recapitalisation. Of this amount, €10.9 billion in EFSF notes was not needed and was later returned to the EFSF. Accordingly, the outstanding loan amount stands at €130.9 billion. This makes the EFSF Greece’s largest creditor by far.

Greece’s financial assistance programme was unique in many aspects. Due to the seriousness of the country’s structural weaknesses and adjustment needs, it was the biggest EFSF or ESM programme ever. It also had by far the most favourable lending conditions ever granted to an EFSF or ESM programme country. It included Private Sector Involvement with sizeable losses for private investors. Greece benefits from an average loan maturity of over 30 years. The country pays neither interest rates nor redemption on the overwhelming part of its EFSF loans until 2023. These favourable lending conditions provided Greece with budgetary savings of over €16 billion for 2013 and 2014 combined. That corresponds to more than 4% of Greek GDP in each of the two years.

From in.gr

Το Reuters αναφέρει ότι ο κ. Ντάισελμπλουμ δήλωσε ότι ένα νέο πακέτο διάσωσης ίσως έχει σκληρότερους όρους. Υπό τις παρούσες συνθήκες είναι η αδύνατη η παράταση του τρέχοντος προγράμματος που λήγει σήμερα, Τρίτη, είπε ο επικεφαλής του Eurogroup ενώ ξεκαθάρισε ότι οι Θεσμοί θα εξετάσουν την αίτηση για ένα νέο πρόγραμμα μόνο μετά το δημοψήφισμα.

Not surprising, perhaps,  considering the half-hearted and last-minute cut-and-paste (?) presentation and unprofessional lay-out and mixed fonts of the new Greek letter and financial request?

Christine Lagarde angry with Greek Minister (enikos.gr) -

Σύμφωνα με αποκλειστικές πληροφορίες του real.gr, η Κριστίν Λαγκάνρτ εξέφρασε προς τους στενούς συνεργάτες της την “βαθιά της απογοήτευση” για τις τελευταίες εξελίξεις καθώς όπως ανέφερε η ίδια “επέδειξε μέχρι το τέλος μεγάλη ευελιξία” . Η κ. Λαγκάρντ τόνισε ότι “ήμασταν στο παρά πέντε μια συμφωνίας” και στοχοποίησε τον υπουργό Επικρατείας Νίκο Παππά λέγοντας ότι με τους χειρισμούς του «τορπίλισε» μια συμφωνία. Η Γαλλίδα αξιωματούχος ξεκαθάρισε επίσης ότι «ανεξάρτητα από το αποτέλεσμα του δημοψηφίσματος την επόμενη Κυριακή η ελληνική κυβέρνηση έχει χάσει την αξιοπιστία της για να διαπραγματευτεί και πάλι με το ΔΝΤ».

Reuters report - As default looms, Merkel rules out more negotiations with Greece - "German Chancellor Angela Merkel ruled out new negotiations with Greece until after it votes on a proposal from creditors, leaving virtually no hope left to avert a midnight default despite a plea from Athens for a last-minute bailout extension".