The main characteristics of the government’s bridging program
On Wednesday the Minister of Finances Yanis Varoufakis will attend the Eurogroup in Brussels, where he will present the…
On Wednesday the Minister of Finances Yanis Varoufakis will attend the Eurogroup in Brussels, where he will present the much-debated bridging program, which the government intends will replace the current bailout agreement. Mr. Varoufakis’ goals will be to achieve a political agreement by the
According to details that have leaked, the government’s bridge program will have the following characteristics:
- The program will last for six months, between March and August 2015. Technically it will be an extension of the current program and loan agreement; however a new text will be included outlining Greece’s commitments.
- The government will aim to have 30% of the provisions from the existing bailout agreement excluded which it considers “toxic”, such as changes in employment relations. Additionally the government wants to lower the primary surplus goals to 1.5% GDP (from 3% to 4.5% in the current deal) in order to tackle the humanitarian crisis.
- As for funding, Greece will collect the remaining final tranche of 7.5 billion euros from the current program, as well as 1.9 billion from SMPs, namely the profits from the Greek bonds held by the ECB and other banks. Additionally, Greece wants t increase the issue limit of bonds by 5 to 8 billion euros to cover expenses in March.
- Mr. Varoufakis will try to use the FSF’s 11.4 billion to help the banks, however this is expected to meet fierce reactions. The likeliest scenario is for this sum (or a large part thereof) to be used as a safety net in the bridging program.
- Coming to an agreement and receiving approval from European parliaments will mean that the European Central Bank will continue to provide liquidity towards the Greek banks, by accepting Greek bonds as collateral.
- The monitoring of the reforms will not be carried out by the troika, but rather separately by European Commission and IMF teams, which will most likely conduct any consultations with involved parties and bodies on neutral ground, such as in Brussels or Paris.