Framework for continued supervision of Greek finances by creditors after bailout stipulated by EU directive

Monday, 25 September 2017 14:07
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By P Kakouris

The continued supervision, by institutional creditors, of the Greek state's finances over the coming decades appears clearly on the horizon, as stipulated in a 2013 EU regulation (472/2013).

Such supervision, which was directly cited by both Eurogroup chairman Jeroen Dijsselbloem and EWG head Thomas Wieser in separate comments last week, is also expected to be extended on the back of medium- and long-term debt relief that creditors may consider in the coming period - and which ranks as a standing demand by Athens.

Ongoing supervision of Greece's finances is envisioned until the country pays back 75 percent of the low-interest loans extended to the country the European Financial Stability Facility (EFSF) and the European Stability Mechanism (ESM).

The specific regulation, as ratified by the European Parliament and Council, refers to the "...the strengthening of economic and budgetary surveillance of Member States in the euro area experiencing or threatened with serious difficulties with respect to their financial stability."

Given that the third bailout is set to end in August 2018, supervision will not entail the current barrage of "prior actions" - i.e. various reforms and liberalizations in the country - and regular reviews by creditors' auditors, but will involve continued scrutiny over fiscal measures, along the lines of the EU's well-known excessive deficit procedure.

Nevertheless, with the implementation of medium-term debt relief after 2019, the maturities of sovereign loans granted to Greece by European institutions will be extended.

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