Eurogroup chief says talk of Greek exit is premature

Author: newsroom  | Published: October 14, 2014

Eurogroup Chairman Jeroen Dijssebloem did not rule out Greece’s early exit from the bailout program but he did express caution

Eurogroup Chairman and Dutch Finance Miniser Jeroen Dijsselbloem said on Monday that discussions on what will happen once Greece exits its bailout program are premature. Following the completion of the Eurogroup meeting in Luxembourg, attended by Greek Finance Minister Gikas Hardouvelis, Mr. Dijsselbloem said that the fifth review of the country’s program is the priority at the moment. He also added that an official request for an exit from the European program has yet to be received.

Mr. Dijsselbloem warned that prudence should be shown concerning Greek exit from the aid program and that an exit would be conditional on economic reforms.

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Mr. Hardouvelis briefed his counterparts on the first phase of Greece’s fifth troika review and stressed the great progress made by the country in applying reforms. Despite all-round improvements, Mr. Dijsselbloem said that effort on specific reforms needs to be made for Greece to remain on the right track even after its exit from EU surveillance. Nonetheless, the government has put the brakes on harsh reforms to Greek social security despite European pressure for this.

A source of the Greek delegation at Eurogroup said that Greece has already covered 65% of reforms, however it is unlikely that we will ever cover 100%, especially regarding social security.

Regarding the draft budget, the EU Economic and Monetary Affairs Commissioner Jyrki Kaitanen said that the draft is still under review. Despite improvements to Greece’s fiscal data, the situation is fragile as shown in the bonds market. Mr. Kaitanen said that many structural reforms still need to be implemented.

Fund director Klaus Regling said that 11 billion euros of the European Financial Stability Fund (EFSF) are benchmarked for the recapitalization of Greek banks. This money can either be returned and reduce the country’s debt whereas another is to use this amount next year.

Greek government sources in Luxembourg said that Greece would prefer to use the ESFS money as a “safety pillow” rather than return it to the Fund.