Greece sticks to exit plan with precautionary support

Greece sticks to exit plan with precautionary support

Greece will stick to its plan to exit the bailout program at the end of this year with some form of precautionary support despite another day of turbulence on bond and stock markets, a senior government official told Kathimerini on Thursday.

“Greece is not going to change its negotiating position,” the sources said on condition of anonymity. “The discussion is ongoing, we are doing our job and everything will be arranged in cooperation with the Europeans.”

The coalition is focused on completing the troika review, which is currently on hold, and then acting on the results of the European Central Bank stress tests, which will be crucial to Greece’s exit plans as it aims to use the money left at the Hellenic Financial Stability Fund (HFSF) to maneuver the early departure.

In Parliament, Finance Minister Gikas Hardouvelis suggested that investors’ reaction, which saw stocks fall by 2.2 percent and bond yields hover at around 9 percent, was “excessive.”

“The atmosphere over the past few days does not reflect on the state of the Greek economy, nor its prospects,” he told MPs.

The government is still hopeful that its exit plan will work as it believes that around 10 billion euros will be left in the HFSF’s capital buffer after the ECB stress tests, allowing it to use this cash for a dual purpose.

According to sources, Greece will repay the outstanding amount to the European Stability Mechanism in order to reduce the country’s public debt and help bring down fiscal targets. However, this money would be set aside and made available to Greece as some form of precautionary credit line.

The provision of the backstop would not lead to a new loan agreement being drawn up. Instead, Greece would draw up its own reform program that would be approved by the European Union, as the IMF would no longer be one of the country’s creditors. Only if Greece draws from the buffer would the government and its European lenders have to agreed a new memorandum.

It should become clearer over the next few weeks if the Europeans are prepared to accept such a scheme.

Πηγή: ekathimerini.com

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