Eurogroup: Legislation of Medium-Term program

The 12 billion euros 5th tranche of the 110 billion euro EU-IMF bailout loan to Greece will be disbursed in early July, provided that approval of the Greek government's Medium-Term fiscal program by the Hellenic parliament has been completed, eurogroup president Jean-Claude Juncker said in the early morning hours of Monday after a eurogroup meeting in Luxembourg.

    Juncker said that progress was also made regarding the participation of the private sector in a second assistance program for the Greek economy, but added that a number of issues were still outstanding.

    The eurozone chief also said that private sector participation should be voluntary and without pressure from the governments.

Juncker further said that the eurozone countries sought of the Greek government to complete the legislative procedure regarding the Medium-Term fiscal program, noting that Greece's partners in the eurozone were also awaiting the vote of confidence in the (newly-reshuffled) government of Greece.

The eurogroup president also reiterated the need for the two mainstream parties in Greece (ruling PASOK and main opposition ND) to agree on the implementation of the EU and IMF program for Greece.

According to a statement issued by the eurogroup, approval of the Medium-Term program by the Greek parliament will pave the way to disbursement of the next tranche of the bailout loan to Greece in early July, while the considerable progress achieved over the last year, particularly with respect to fiscal consolidation, was acknowledged by the eurozone ministers.

Regarding the support program for Greece, the eurozone finance ministers decided to define by early July the basic parameters "of a clear new financing strategy".

Also, for the first time in an announcement, the eurogroup made note of the need for political consensus in Greece, noting that the eurozone finance ministers called on all the political parties in Greece to support the fundamental targets of the program so as to ensure its rigorous and expeditious implementation.

Bearing in mind the length, magnitude and nature of the required reforms in Greece, national unity is a prerequisite for success, the announcement concluded.

The full text of the eurogroup announcement is as follows:

"The Greek authorities are embarking on a significant and necessary adjustment effort. Ministers recognised the considerable progress achieved by the Greek authorities over the last year, particularly in the area of fiscal consolidation.

Ministers are also conscious of the serious challenges that Greek citizens are facing in these difficult times.

Ministers took note of the debt sustainability assessment prepared by the Commission and the IMF. The assessment showed that debt sustainability hinges critically on Greece sticking to the agreed fiscal consolidation path, the plans of collecting EUR 50 billion in privatisation proceeds until 2015, and the structural reform agenda which will promote medium-term growth.

Ministers look forward to the Commission's Compliance Report, that requires the finalisation of the updated Memorandum of Understanding, which is expected in the coming days, reflecting the outcome of the ongoing negotiations between the Greek government and the European Commission, in liaison with the ECB, and the IMF.

This, together with the passing of key laws on the fiscal strategy and privatisation by the Greek parliament, will pave the way for the next disbursement by mid-July.

However, given the difficult financing circumstances, Greece is unlikely to regain private market access by early 2012. Ministers agreed that the required additional funding will be financed through both official and private sources and welcome the pursuit of voluntary private sector involvement in the form of informal and voluntary roll-overs of existing Greek debt at maturity for a substantial reduction of the required year-by-year funding within the programme, while avoiding a selective default for Greece.

On these conditions, Ministers decided to define by early July the main parameters of a clear new financing strategy.

Ministers call on all political parties in Greece to support the programme's main objectives and key policy measures to ensure a rigorous and expeditious implementation. Given the length, magnitude and nature of required reforms in Greece, national unity is a prerequisite for success."

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