European Union leaders were meeting in Brussels on Friday after eurozone ministers agreed on Thursday to release funds to secure a debt reduction scheme for Greece, known as PSI (denoting private sector involvement), with the remaining aid to follow. The focus shifted away from the Greek problem on Friday with EU leaders examining the bloc’s broader problems. All but two of the EU’s 27 leaders signed a new treaty aimed at enforcing budget discipline within the bloc. The so-called “fiscal compact – aimed at preventing countries from running up huge debts like those which led to bailouts for Greece, Portugal and Ireland – was signed by all EU states except Britain and the Czech Republic. Meanwhile sources indicated that the mood toward Greece had warmed after eurozone ministers appeared to be satisfied by Greek efforts to push through reforms and impose new austerity measures in exchange for fresh rescue loans.
On Thursday, Eurogroup Chief Jean-Claude Juncker indicated that Athens had done most of what had been asked of it. “Ministers note with satisfaction that Greece took swift and decisive action in the areas of fiscal consolidation, revenue administration, pension reform, financial sector regulation and supervision and growth-enhancing structural reforms,” Juncker said in a statement. He added, however, that creditors would determine in coming days whether “prior actions” demanded of Greece had been transposed into law. Juncker said ministers had given the green light for the eurozone’s crisis fund to issue 30 billion euros’ worth of bonds for use as “sweeteners” for private investors taking part in the PSI. But he said that no more aid would be released until the PSI is completed successfully. It is expected that finance ministers will hold a teleconference call next week to decide upon granting the final approval for the Greek bailout.
The call is likely to be held on March 9, when the Greek government is set to announce the result of its offer to bondholders.