Too early to tell if Greece needs new bailout, says Dijsselbloem

Euro group president holds off decision as €8.3 billion given to Greece in interim

Mario Draghi, president of the ECB, and Dutch finance minister and euro group head Jeroen Dijsselbloem (seated centre) in Athens yesterday. Photograph: EPA/Alexandros Vlachos

Mario Draghi, president of the ECB, and Dutch finance minister and euro group head Jeroen Dijsselbloem (seated centre) in Athens yesterday. Photograph: EPA/Alexandros Vlachos

Wed, Apr 2, 2014, 01:00

Euro group president Jeroen Dijsselbloem said yesterday it was too early to say if Greece would need a further bailout when its EU programme finishes at the end of this year. He said he would return to the issue in September.

The head of the euro group of euro zone finance ministers was speaking as those ministers signed off on an €8.3 billion loan to Greece, in one of the final major tranches of loans due to the country under the terms of its second bailout.

The €8.3 billion will be paid in three instalments – €6.3 billion this month (in time for next month when €9.3 billion of debt repayments fall due), followed by €1 billion in June and again in July.

A total of €1.8 billion will remain due to Greece under the terms of the programme, which expires at the end of the year, with the IMF’s commitment stretching to the first quarter of 2016. The next troika review mission is due in Athens in summer.

The disbursement of the latest round of funding had been delayed since September amid disagreements between the Greek government and the troika about the scale of budget cuts needed. But the government won a vote in the Greek Parliament on Sunday on a fresh package of austerity measures including the liberalisation of certain industries and changes to wage-bargaining rules.

After the meeting, EU economics commissioner Olli Rehn acknowledged the “great efforts made by Greece” over the past four years to repair the public finances and build a more sustainable model for growth and job creation.

“We all know how difficult this adjustment has been and how great are the challenges faced by many Greek citizens still today,” he said but added “there was no easy way” to resolve the problems confronting Greece in 2010, given the scale of economic imbalances that had built up over many years.

European Central Bank president Mario Draghi, who attended the meeting, said Greece had made “remarkable progress”. Despite “suffering greatly,” the country was starting to see the benefits of the programme, he said, but warned that more structural reforms were needed.

Greece has returned to a current-account surplus this year and has seen its 10-year bond yields fall to 6.6 per cent in recent days.

The Greek government has signalled its intention to return to markets by the year’s end.

Speaking after yesterday’s meeting, which took place in Athens due to Greece’s residency of the Council of the European Union, Ireland’s Junior Minister for Finance, Brian Hayes, said there was growing confidence that the Greek situation was improving, while the prospect of Greece’s imminent return to the markets had been discussed on the margins.

“That would be a hugely significant step. The fact that the decision was taken regarding the significant disbursement is a sign of the growing confidence the euro zone has in the Greek economy having come through a difficult period.”

He said Portugal’s decision on its bailout exit strategy was a matter for the Portuguese government. The euro group is due to discuss Portugal’s imminent exit from its bailout at a meeting in Brussels in a month.

Representatives from all 28 member states are to continue discussions today in Athens, where an update on the banking union is expected. The European Parliament is due to vote on the revised Single Resolution Mechanism proposal in two weeks’ time in Strasbourg.